In response to the Bank of England’s latest Inflation Report, which includes upward revisions for GDP growth, Michael Martins, Economist at the Institute of Directors, said:
“The Bank of England’s upward revision to its growth forecast is to be welcomed. Many businesses have adopted a ‘wait and see’ approach on Brexit, helping to maintain growth. The majority of IoD members want the UK to reach a good deal with the EU, rather than a quick one, so it’s very important that companies continue with their steadfast and optimistic approach.
“The key question will be whether wage growth continues to hold up. This is likely to be set out in greater detail in May’s Inflation Report, given that 75 per cent of pay decisions take place in the first half of the year. If wage growth continues at a relatively good clip, this should help to offset the rise in inflation eating into disposable income. We think respectable wage growth is likely as 83 per cent of IoD members are planning to increase job numbers or keep them the same, a helpful proxy for wage increases.”