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Sunday, 17 November, 2002, 10:43 GMT
Bank governor warns over pay claim
Sir Edward George speaking on Breakfast With Frost
Sir Edward: Big pay rises would push up inflation
Giving in to the firefighters' 40% pay claim would damage the UK's economy, according to the Governor of the Bank of England.


if we got wage inflation driven by the threat of strike in this way then that would impact the whole of the economy

Sir Edward George
Sir Edward George warned that if the government agreed to such an increase then other claims would follow.

"There has to be a real risk that other elements in the public sector first of all would say `me too.'

"That would be very difficult to stop if it were allowed to start," he told BBC TV's Breakfast With Frost programme.

Inflation threat

"I think one has to recognise that if we got wage inflation driven by the threat of strike in this way then that would impact the whole of the economy.

"We would see not just inflation higher, we would see unemployment higher and I think it would be very damaging indeed."

But he said it was a matter for the politicians and not for central bankers.

In the same interview Sir Edward said he was not concerned about the danger of a 'black hole' developing in the government's finances.

He said the UK's finances were in much better shape than those most other countries in the world and the chancellor had room for manoeuvre.

But he warned that the rise in consumer spending needed to slow down.

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 ON THIS STORY
Sir Edward George
"I think it would be very damaging indeed"
Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

16 Oct 02 | Business
15 Oct 02 | Business
10 Oct 02 | Business
04 Oct 02 | Business
26 Jun 02 | Business
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