STUC on inflation and bank profits and pay

February 15th 2011

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Commenting on the publication of the latest inflation figures published today, Grahame Smith, Scottish Trades Union Congress (STUC) General Secretary said:

“Today, on the eve of the publication of the latest unemployment statistics for Scotland, two significant items of economic news were released.

“First, on the back of the Government guarantee, reduced competition and cheap money, Barclays announced a 32% increase in operating profits and a bonus pool of £3.4bn. Worryingly for the rest of the economy, Bob Diamond expressed his intention to increase the ‘pace and intensity’ of efforts to improve Barclay’s financial performance. The appetite for irresponsible leverage fuelled risk appears undiminished.

“Next, another substantial increase in inflation was confirmed thereby ensuring that real terms pay will continue to decline at a rate not seen since the 1920s. According to ONS, the two main factors accounting for this increase were higher fuel prices and the Government’s decision to increase the regressive VAT.

“The last thing the economy needs is a hike in interest rates to appease the City. With cuts about to bite, demand low and a large and persistent output gap a rise in interest rates would hit employment growth whilst doing precisely nothing to address the factors behind rising inflation. If the Chancellor is remotely concerned about growth and jobs he must rip up his current strategy and use the March Budget to start again”.

ENDS

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