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UK salaries still under pressure

A report by the CBI will today confirm that many UK companies will maintain a pay freeze in 2010 with only 4% looking to increase their staff wages by more than inflation. The report will also show that 37% of companies surveyed have a recruitment freeze in place, down from a high of 61% earlier this year, but on the whole it looks as though in real terms we will see a reduction in the average UK salary in 2010. So what does this mean for the average UK taxpayer?

In simple terms, with inflation set to pick up over the next few months the power of the pound in your pocket will be reduced next year and is unlikely to be placed by a pay rise until 2011 at the earliest. However, this is perhaps the balancing act which is needed between job security, business profitability and a successful future?

There is no doubt that even if the UK economy was to start and pick up tomorrow there would still be much pain for UK consumers and UK taxpayers in the short to medium term. Not only will the business arena remain very competitive and difficult but the inevitable increase in business and personal taxes is set to become more prominent from 2010 onwards.

At the first glimpse of an economic recovery, one which is at least sustainable, the UK government would be forced to increase taxes although they themselves will need to find a level which allows businesses and consumers to "live again" while replenishing the UK government coffers at the same time.

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