Darling calls for restraint with pay increases

Sunday, 22 June 2008 12:00 AM

Chancellor of the Exchequer Alistair Darling has today called for future pay increases to be in line with the government's inflation target of two per cent.

He warned that any wage increases over and above the government's target for the rate at which prices generally rise would harm the entire economy as it would prevent moves to keep inflation under control.

Speaking on the BBC's Andrew Marr Show, Mr Darling said: "It's absolutely imperative from the boardroom to the shopfloor, both private and public sector, that we don't allow inflation to take hold again.

"Pay awards in both the private and public sector have to be consistent with our inflation target which is 2 per cent. We've got to make sure that we keep inflation under control because if we don't what will happen is that people may get a pay increase but every penny of it will be eaten up by rising prices in the shops," he added.

Furthermore, the cabinet official responsible for the UK economy added that further inflation was in no one's interest and would harm workers in both the public and private sector.

Mr Darling echoed the governor of the Bank of England Mervyn King's warning that the UK economy was facing difficult times ahead but said that the economy was in better shape to deal with problems.

Asked about Mr Brown's political standing, Mr Darling told the BBC: "I have always taken the view that we can turn this round.

"We have had a difficult year, whether it's the economy or other political issues as well, but I believe we are doing the right thing," he added.

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• economy
,
• employment