Bank of England (BoE) Governor Andrew Bailey has caused controversy by suggesting that workers shouldn’t ask for significant pay rises to help curb inflation.
Millions of people across the country are facing a cost of living crisis, with energy bills rocketing and the rate of inflation expected to top 7% in the months ahead. The central bank this week raised its base rate to 0.5%, adding to the pain for people on tracker mortgages.
But Andrew Bailey has said that workers in the UK should consider reining in their pay demands. So who exactly is Andrew Bailey?
READ MORE: Interest rates: What they mean for the economy, what they mean for house prices – and what happens when they rise
Who is Andrew Bailey?
Andrew Bailey is the current governor of the Bank of England, a role he has occupied since March 2020.
Educated at Queens’ College, Cambridge, he was a research officer at the London School of Economics after leaving university. He joined the Bank of England in 1985.
Bailey has occupied various roles at the Bank of England, including chief cashier, executive director for banking services and head of its Special Resolution Unit.
From 2007 to 2011, Bailey took charge of the BoE’s efforts to address the crisis in the banking sector, before being appointed chief executive of the Financial Conduct Authority (FCA) – the UK’s financial regulator – in 2016.
However, the FCA under Bailey was strongly criticized by the Treasury select committee in the House of Commons, as well as by consumer groups.
Bailey replaced Mark Carney as Bank of England governor in March 2020. His term is due to expire in March 2028.
What did Andrew Bailey say about pay rises?
In an interview with the BBCAndrew Bailey was asked whether the Bank of England was essentially asking UK workers to restrain their pay demands and said: “Broadly, yes.”
His remarks came after energy regulator Ofgem announced it was raising its energy price cap by almost £700 to £1,971 a year – raising fears that millions of people could be plunged into fuel poverty – and after the BoE raised its own base rate from 0.25% to 0.5%.
Bailey acknowledged that the prospect of below-inflation wages rises – on top of everything else facing UK households – would be “painful” for many.
“I don’t want to in any sense of sugar that, it is painful. But we need to see that in order to get through this problem more quickly,” he said.
According to the Bank of England’s own calculations, British workers are looking at a 2% fall in real post-tax labor income this year – the sharpest decline since records began in 1990.
Wage growth in the UK has been generally very weak for more than a decade, since the aftermath of the 2008 global financial crisis and subsequent recession.
How much is Andrew Bailey paid?
Andrew Bailey is reportedly paid around £500,000 a year as governor of the Bank of England.
How high is inflation in the UK?
Official figures from the Office for National Statistics revealed that UK inflation hit 5.4% in December – and it is expected to rise higher in the months to come.
A separate study, from the British Retail Consortium and market research firm NielsenIQ, found that shop price inflation doubled from 0.8% to 1.5% in January. Price increases on non-food items were largely responsible, the report said.
The Bank of England predicts that inflation will reach 7.25% in April. Its Monetary Policy Committee voted 5-4 to increase interest rates when it met earlier this week.
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