UK firms plan biggest pay rises since 2012 to fill staff gaps

Reuters reports that British employers expect to raise wages for their staff by the most in at least 11 years but the 5% pay deals for workers would still fall well below expected inflation.

The article cites a survey that was published on Monday.

''With the Bank of England fearing the surge in inflation could be harder to tame if pay deals keep rising, the Chartered Institute of Personnel Development (CIPD) said 55% of recruiters planned to lift base or variable pay this year as they struggle to hire and retain staff in Britain's tight labour market.''

"Skills and labour remain scarce in the face of a labour market which continues to be surprisingly buoyant given the economic backdrop of rising inflation and the associated cost-of-living crisis," Jon Boys, senior labour market economist at the CIPD, said.

Reuters explained that, ''expected median annual pay awards in 2023 rose to 5% - the highest since CIPD records began in 2012 - from 4% in the previous three months.

More than half of respondents reported having problems filling vacancies, and nearly one in three expected similar issues in the next six months.''

GBP/USD update

The Bank of England's Governor Andrew Bailey last week expressed concerns about wage-setting although markets will look to this week's Labour market data that analysts at TD Securities argued ''will likely continue to keep the pressure on the MPC heading into its March meeting.''

''We look for the Unemployment Rate to fall to just 0.1ppt above its series low and continue to look for another acceleration in ex-bonus wages. We also think headline wage growth stayed strong on a MoM basis.''

Technically, the price is en-route for lower at the start of the week as the following daily chart's thesis illustrates: 

• GBP/USD Price Analysis: The day ahead and initial balance have something for both bulls and bears