Business leaders expect to raise workers’ wages above the level of inflation during 2015, despite continued concerns about the global economy and the outlook for Britain.
As they enter the new year, about 60 per cent of leading chief financial officers (CFOs) said their firms faced ‘normal, high or very high levels of uncertainty’, according to a new report.
This compares to a low of 49 per cent among finance heads nine months ago, though it is the same level as a year ago.
But CFOs were upbeat that the long-term squeeze on real terms earnings and consumer spending would end, forecasting that wages would rise 2.9 per cent in 2015, well ahead of an expected Consumer Price Index (CPI) inflation rate of 1.3 per cent.
Pay rises have not been consistently ahead of inflation since 2008, though latest figures for the three months to October showed total pay increasing by 1.4 per cent, nudging ahead of CPI.
Finance directors were broadly positive on the domestic environment, according to the poll of 119 executives from FTSE 100 and FTSE 250 firms as well as other large private UK companies.
But fears about UK politics, including a possible referendum on Britain’s membership of the EU, and weakness in the eurozone were among their biggest concerns.
There were also further worries about poor British productivity, the possibility of a UK housing bubble and further cuts in spending.