UK employers nudge up planned pay rises: Lloyds

[LONDON] British employers have increased how much they plan to raise staff pay this year, a survey showed on Monday, but the expected pay rises are well below those in a Bank of England survey which influenced this month's interest rate rise decision.

Britain's central bank is concerned that a surge in inflation to a 30-year high, driven by a spike in energy prices, may turn into persistent high inflation if it leads to bigger pay demands and widespread price rises for other goods.

The BoE raised its main interest rate to 0.5 per cent from 0.25 per cent on Feb 3 and a number of policymakers have said their thinking was influenced by a recent annual BoE survey that showed companies planned to raise pay by an average 4.8 per cent.

However, other surveys of businesses' pay plans point to much smaller increases.

Monday's monthly data from a Lloyds Bank survey of 1,200 companies showed 25 per cent of businesses planned to pay rises of 1 per cent to 2 per cent over the next 12 months, while 23 per cent planned 2 per cent to 3 per cent pay rises.

Around a quarter expect pay to rise by 3 per cent or more.

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Although these percentages are all up slightly from last month - and the number of firms planning pay freezes or smaller pay increases has fallen - this suggests the inflationary pressure from higher pay will remain low.

Other surveys have shown businesses expect to raise pay by around 3 per cent this year.

Just under half of companies in the Lloyds survey - conducted between Feb 1 and Feb 15 - said they expected to raise prices because of increased costs.

The BoE expects consumer price inflation to peak at around 7.25 per cent in April when regulated household energy tariffs rise by more than 50 per cent. REUTERS