Governor Mark Carney signalled that British interest rates will stay at a record low until later than expected when he set out the Bank of England's latest economic outlook. David Pollard asks what's happened to the UK's recovery.
No pay rise in five years - that could be about to change for workers at this haulage company. Latest UK data shows unemployment down again - and - at a 1.3 per cent rate - wages rising faster than inflation for the first time in five years. There may be something to look forward to after all, says director Nick Matthews. SOUNDBITE (English) NICK MATTHEWS, DIRECTOR, MATTHEWS HAULAGE, SAYING: ''As far as wages is concerned, we are currently reviewing those, and we hope to have something giving the employees more money in place around the start of the tax year.'' UK finance minister George Osborne says it's all part of the plan. (SOUNDBITE) (English) GEORGE OSBORNE, UK FINANCE MINISTER, SAYING: ''We have a strong sign today that Britain's long-term economic plan is working. There's a big fall in unemployment, a record number of jobs and an encouraging sign that pay cheques are rising faster than inflation.'' There's more strong wage growth to come, says the Bank of England. Although it's not all sunshine. Growth is still seen at 3.5 per cent this year, according to its new outlook. But next year's forecast has been shaven back - if only a fraction. And inflation is slipping fast. Now at 1.2 per cent, it may well, says governor Mark Carney, drop below the one per cent threshold within half a year. A sharp fall in commodity prices is one reason. That could be eclipsed by worries imported from abroad. (SOUNDBITE) (English) MARK CARNEY, GOVERNOR, BANK OF ENGLAND, SAYING: ''Since we last met in August, indicators across much of the advanced and emerging world have been moribund. There's a spectre now haunting Europe, the spectre of economic stagnation, with growth there disappointing again, and confidence falling back.'' That analysis has already taken hold in the markets, says IG's Alastair McCaig. (SOUNDBITE) (English) ALASTAIR MCCAIG, IG MARKET COMMENTATOR, SAYING: ''Certainly there's a bit of nervousness and pre-emptive manoeuvring has gone on as far as traders are concerned about the implications of what effectively is a stalling euro zone economy and when the German figures are getting affected as well, that really has rung a few alarm bells.'' Carney did utter the key phrase the markets were looking for: that 'expectations' for monetary policy had eased 'significantly'. It's bank code for saying a rate hike will come later than previously thought. The latest BoE outlook suggests October of next year. But with the Bank also forecasting inflation won't get back to a target rate of two percent until 2017, who's to say it might not be even later?