London, 23 February 2022
Questioned by MPs on the Treasury Committee this morning, Bank of England governor Andrew Bailey appeared to qualify his previous warning to workers to exercise ‘restraint’ in their wage demands to address the cost of living crisis.
MP Angela Eagle asked Bailey: ‘‘what have you said publicly about companies reducing their price increases like you’ve asked employees to moderate their pay demands’? The governor replied: ‘“the same point holds for the process of price setting”.
Bailey argued that his comments had been taken out of context and that he acknowledged the distributional impacts of inflation, adding that what “worries” him is that “it’s those with least bargaining power in the labour market that lose out in this situation”.
Fran Boait, executive director of research and campaign group Positive Money, said:
“It’s good to see Andrew Bailey finally calling out the role of companies setting higher prices in driving inflation, after telling workers they shouldn’t ask for pay rises to keep up with the rising cost of living.
“Instead of hitting workers with a triple blow of real pay cuts, tax rises, and higher interest rates, the government should be tackling the cost of living crisis by implementing stronger price caps and breaking the excessive price-setting power of monopoly firms.”
Treasury Committee questions Andrew Bailey on the latest Monetary Policy Report (Angela Eagle’s question on price setting can be found at 09:56:50): https://parliamentlive.tv/
“Backlash after Bank boss says don’t ask for big pay rise”, 4th Feb 2022: https://www.bbc.co.uk/news/
“7 ways policymakers should respond to the cost of living crisis”, David Barmes, Positive Money Senior Economist, for Open Democracy, 1 Feb 2022: https://www.opendemocracy.net/
en/oureconomy/how- policymakers-should-respond- to-cost-of-living-crisis/
Positive Money is a research and campaign organisation working towards a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org.
For more information from Positive Money or to arrange a briefing/interview with a spokesperson, please contact email@example.com or Anna Pick on 07948802104.
- Image from Treasury Committee session, Wednesday 23 February 2022: https://parliamentlive.tv/event/index/ff4b49e4-ab54-4145-9191-4f92805c5fff . Open Parliament Licence v3.0