Will Labour’s tax breaks for employers see an increase in UK wages?
This weekend, Labour Leader Ed Milliband has promised to close the gap between employee wages and the cost of living, with tax breaks for employers that are prepared to pay a living wage.
However, with no hard and fast policy in place to actively coerce employers to pay more, such as an increase in the minimum wage, it remains to be seen whether this will have a positive impact on the economy.
Recent figures have suggested that the UK economy has achieved its highest rate of growth since the recession, with the last quarter figures of 2013 recording an increase in growth of 0.7 percent. The UK Business Conference Monitor (BCM) forecast suggests that the economy may record a fourth quarter growth of 1.3 percent, almost double the amount for the last quarter.
Some economic analysts are advising caution however. The improved economic performance has been driven by an increase in consumer spending, and it is only recently that business leaders have shown any inclination to match consumer spending with business investment, particularly in the area of employee wages.
Confederation of British Industry (CBI) has increased its growth forecast for the UK up to 2.4 percent for 2014; however, wages are predicted to rise by only 1.8 percent, still far below the rate of inflation. This may bring the question of economic growth over the long term into question, as the increase in consumer spending may well be fuelled by debt, bringing the discrepancy between wages and the cost of living into the spotlight.
The strong position of the pound in online forex trading can only continue with sustainable growth of the UK economy, as more households in poverty could cause a reversal that could negate any progress made with Stirling.
