Bank of England Governor Andrew Bailey raised concerns at the British Chamber of Commerce conference about the negative effects of the Chancellor's tax increases on employee compensation and employment levels. He indicated that companies may pass on the burden of higher salaries to customers, leading to adjustments in pay. With a rising inflation rate in May, Bailey noted heightened uncertainty for businesses and emphasized the need to tackle remaining inflationary pressures, stating that while interest rates may trend downward, monetary policy will adapt based on evolving economic conditions.
The rise in inflation in May introduces some further uncertainty into the near-term outlook for businesses prices, adding that they need to squeeze out inflation.
I am beginning to hear a bit more evidence of adjustments through pay and employment, highlighting the negative impact of tax increases on workers.
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