MPC minutes - PwC chief economist comments

Published at 12:24 PM on 23 July 2014

In response to the Bank of England MPC meeting minutes published today, John Hawksworth, PwC’s chief economist, said:

“The MPC is still struggling to decipher the mysteries of the UK labour market, which has been behaving very differently than in previous UK economic cycles. Output and employment growth have not shown much sign of slowing down and the latest summary of business conditions from the Bank's agents shows a further increase in recruitment difficulties. Normally this would be expected to feed through into higher wages and prices, but it is taking much longer than past experience would suggest.

“Our own analysis suggests that UK labour supply has become more elastic, particularly for older workers, while labour demand has become more skewed towards lower paid, lower skilled occupations. Both factors are holding down average earnings growth at present despite a relatively strong and increasingly broad-based economic recovery. Meanwhile, a stronger pound has reduced import price pressures over the past year.

“All of this suggests that it will be some time before a majority of MPC members become convinced of the need for an immediate rate rise. But some members may start to vote for a rate rise in the autumn if the recovery remains on track."




Gill Carson
PwC | Media Relations Manager
Office: 020 7212 1391 | Mobile: 07837 285466
Email: [email protected]
PricewaterhouseCoopers LLP
twitter: @gill_carson


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