Reuters - Video

Edition: U.S. | U.K. | IN | CN

Finance Videos

Strikes dent optimism over UK recovery

Thursday, July 10, 2014 - 02:12

Public sector workers across Britain strike over pay, pensions and cuts as the Bank of England announces its latest interest rate decision. David Pollard asks if the industrial action should be a warning the UK may not be as far along the road to recovery as it would like?

▲ Hide Transcript

View Transcript

It's a robust recovery, the UK leading its G7 peers on the climb back to growth. Or is it? Thousands of striking public sector workers are asking where their share of the spoils is. Recent data has others wondering too. Factory output in May suffered its biggest fall since January of last year. And the UK trade gap widened. As for the public sector workers: many are on strike over wages, which, they say, have barely moved in years of pay freezes. Brenda Kelly of IG. SOUNDBITE (English) BRENDA KELLY, MARKET ANALYST, IG, SAYING: ''I do feel in some respects there has been a little bit of complacency in relation to the UK ... There is a certain amount of disillusionment amongst many sectors of the country in respect of the fact of whether it's been trickling down, whether the actual success of the economy is having an effect on the money in the pocket. And as long as wage growth is not matching up to inflation, that's going to be the problem.'' It's certainly a problem for the Bank of England. Last month, Governor Mark Carney surprised markets when he warned rates would go up sooner than they expected. But was then seen easing from that when he warned wages weren't going up by as much as thought. The Bank's also been adding new members to its rate-setting committee. As predicted, they did nothing to change rates or QE at their latest meeting. But the recent additions have heightened anxiety over the timing of rate moves. ING economist James Knightley. SOUNDBITE (English) James Knightley, Senior Economist, ING, SAYING: ''We think there is a good chance of November. The labour data is phenomenally strong, but I think we do need to see some pick-up in wages. At the moment, the headline wage growth is just 0.7 per cent. That's really, really low by historical standards. I think we'd ideally like to see something closer to two, two and half per cent to make the Bank of England confident that labour market slack is being eroded.'' One recent report suggest workers lost at least ten per cent of their income during the financial crisis. That's more than previously thought. The government is on the defensive. The Conservatives in the coalition are promising action next year to ensure more workers must vote for a strike before it can go ahead. First, the Conservatives have to gain a big enough vote to win next May's election.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Strikes dent optimism over UK recovery

Thursday, July 10, 2014 - 02:12