Wage rises are back. After years of meagre raises, British workers should find their salaries growing faster than prices this year.
Mark Carney came bearing the good news. The Bank of England has upgraded its growth forecasts, and that includes pay. Wages should grow by around 3pc this year and keep accelerating, just as inflation starts to subside. As always, there was a cloud to the silver lining. Two clouds, in fact.
First, this is exactly what spooked markets in the US last week. Faster pay growth means more chance of the economy overheating and so more interest rate hikes.
Secondly, wages are growing more quickly than productivity, so companies are paying more for each unit of workers’ output, which will put them under pressure to hike prices.
But before examining those pitfalls, look at the reason pay is on the up. Unemployment has plunged from a peak of 8.5pc in 2011 to 4.3pc. The...