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Is Inflation Set To Motor Higher?

As the threat of widespread industrial action in the UK moves ever closer there are real fears that even a concerted effort by the Bank of England will not be enough to curb the growing threat of inflation. The rate is forecast to rise to 4% this year and that was before the raft of strike actions announced by unions across the UK. The recent fuel delivery strike saw an inflation busting 14% pay deal agreed and opened the eyes of many employees and unions.

If the fuel delivery companies are looking at 14% pay rise, and are still able to maintain their profitability, then why would unions look to agree member deals in the region of 2%?

The more pay deals of over 2% announced in the press, the more pressure we will see on the UK economy. Many companies, and the government, are not in a position to award inflation busting pay rises and also maintain their current returns – indeed the public purse is already over stretched as it is. Gordon Brown will need to pull some rabbits out of his financial hat over the next few months unless he could lose total control of the economy, inflation and the electorate.

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