A long-awaited pay rise for UK workers is finally here, according to a Bank of England survey of businesses.
According to the February update, private sector business leaders are expecting an average pay settlement rate of 3.1 per cent in 2018, compared with 2.6 per cent last year.
Only the construction sector is predicted to see settlements stay the same, while consumer services workers will see the biggest rise as companies are forced to comply with the National Living Wage.
The news follows hawkish comments from Bank of England interest rate setters last week, who implied that a rate hike might be on the cards sooner than expected due to inflationary pressures. Wage rises could increase this impetus.
The research will be a positive reassurance for the Bank of England, which has maintained wages will rise even as other economic bodies have predicted zero wage growth for the UK.
Looking at business conditions more generally, consumer spending growth had seen little change but the market for new cars was particularly challenging. "Consumer services turnover growth continued to be helped by strong growth in inbound tourist spending, though there were some signs of a softening in discretionary spend by domestic consumers," said the Bank's report.
Growth in business services turnover was supported by mergers and acquisitions and demand for UK services abroad.
Companies' investment intentions remained positive, but were focused on automation, artificial intelligence and robotics to help drive efficiency.