Page last updated at 10:08 GMT, Sunday, 22 June 2008 11:08 UK

Darling calls for pay restraint

Interview with Alistair Darling

Chancellor Alistair Darling says pay rises for people "from the boardroom to the shopfloor" need to be "consistent" with the 2% inflation target.

He told BBC One's Andrew Marr show the need to keep inflation under control "applies to each and every one of us".

He said above-inflation pay increases would be "extremely damaging".

Mr Darling said the UK economy was "far better equipped" than in the 1970s, 1980s and 1990s, but "despite that we are in for a tough time".

The government's preferred inflation measure, the Consumer Prices Index rose, to 3.3% in May, with the Bank of England warning it may reach 4%.

The wider Retail Prices Index measure of inflation - the one used for many pay negotiations - is already at 4.3%.

Asked if people should accept their living standards were going to fall this year - as they get pay rises below the level of inflation - Mr Darling said that everyone "had a vested interest" in not allowing inflation to take hold.

He said: "We've got to make sure that we keep inflation under control because if we don't what will happen is that people may get a pay increase but every penny of it will be eaten up by rising prices in the shops.

"Now none of us want to see that happen, it's in no-one's interest and that applies from the top to the bottom, public and private sector alike."

The chancellor was speaking as BPIX opinion poll for the Mail on Sunday suggested Labour was trailing the Conservative Party by 49% to 26% -with the Lib Dems on 14%.

The poll - which saw 2,385 people questioned online between 18 and 20 June - comes ahead of Gordon Brown's first anniversary as prime minister, on Friday.

Asked about Mr Brown's position, Mr Darling told the programme: "I have always taken the view that we can turn this round.

"We have had a difficult year, whether it's the economy or other political issues as well, but I believe we are doing the right thing."

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