Return to Insights

BoE’s Huw Pill: Households “Need to Accept That They’re Worse Off”

Yesterday, the Bank of England’s chief economist maintained that British households must accept that they’re worse and stop pushing for higher pay as real wages fall at their fastest rates for 20 years.

In a nod to concerns over a wage-price spiral, Huw Pill stated that people “need to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether [through] higher wages or passing the energy costs through onto customers”. These remarks follow the Bank of England suggesting that a more aggressive rate hike cycle early on would have done little to combat rising prices.

Pill’s comments come as UK headline inflation remains in double digits having hit 11.1% in October, its highest level in four-decades. The level of inflation also continues to be five times over the BoE’s target rate as money markets now imply that Threadneedle Street will likely opt for two further 25bps rate hikes in addition to a further possible 25bps thereafter.

The UK’s latest employment figures indicated that total pay fell 3% when adjusted for inflation as the stretch on households continue to exacerbate the cost-of-living crisis. The print also highlighted the gulf between the private and public sector with average regular pay being 6.9% for the former and 5.3% for the latter. Pill’s comments attracted criticism from a number of organisations, including the GMB union and Federation for Small Businesses, not least because Pill is currently on an annual salary of around £340,000.

Biden Announces Re-Election Bid

Yesterday, Joe Biden announced his 2024 re-election bid as the incumbent president seeks to gain another 4-year term. After months of speculation, Biden stated that “this is not a time to be complacent; that is why I am running for re-election”. It is expected that Biden will comfortably pass the Democratic primaries with only Marianne Williamson and Robert F Kennedy Jr also announcing their intention to run for the Democratic nomination.

Biden’s bid comes months after Trump announced his campaign in November. Trump’s declaration came during a one-hour speech which saw him vow to make America “great and glorious again”. This speech came just days after the Republicans suffered an underwhelming midterm election. Since then Trump has been embroiled in yet another scandal which has involved him facing criminal investigations for 34 counts of falsifying business records with intent to conceal breaches of campaign finance laws.

The Spanish producer price index has fallen into negative territory for the first time since December 2020, raising hopes that inflationary pressures are continuing to ease. Yesterday’s print saw prices fall 1%, well below expectations of a 2.8% rise. By far the largest contributor to the downward price pressure was the declining cost of energy which fell 15.9% on an annualised basis.

German Consumer Confidence Rises to Highest in Over A Year

German consumer confidence has risen to its highest level in over a year with households continue to be upbeat on easing energy prices and expectations of higher wages. Germany’s GfK Consumer Climate Indicator climbed to -25.7pts, marking the seventh consecutive rise in the index and the highest level since the Russian invasion of Ukraine. Nevertheless, while consumer confidence is rising, the index still remains below the pre-pandemic level of about three years ago.


If you would like a PDF of this commentary, please contact us and we'll be in touch.

Contact us


Find out how we have helped our clients meet their hedging requirements.

Monday Rundown

Macro Monday, expectations set on future tax cuts, unwelcome opposition for Labour after Galloways Rochdale by-election win, ceasefire talks stalled, Russians intercept German air force video conference, talk of issues and downgrades of US regional banks, and looking ahead to this weeks data calendar.

WTFX: Issue 10

In this month’s WTFX we look at the Space Renaissance and the extent to which the UK is making inroads into outer space...

Morning Round-Up

Friday Feeling, Labour majority overturned by Workers Party of Britain in Rochdale by-election, PCE index for the US comes in line with expectations, prices rose by more than expected in the Nationwide House Price Index, and growing GDP for Canada.

EC Considers Using Funds from Frozen Russian Assets to Arm Ukraine

Thought for Thursday, president of EC proposes the use of funding from frozen Russian assets to arm Ukraine, disquiet between Poland and Ukraine as Polish prime minister considers closing borders, and this afternoons US data release.

G20 and Michigan Primary in Focus

Word of the week Wednesday, G20 reconvene in Sao Paulo, Democrat and Republican primary elections in Michigan last night, and preparations for the Gaganyaan space mission sees four Air Force pilots shortlisted.

Hungarian National Assembly Approves Sweden’s Nato Bid

Travel Tuesday, motion supported by Hungarian parliament to allow Sweden to join Nato, Trump's legal bill continues to grow interest with US monetary conditions at their tightest level in 22 years, and today's data.

Red Sea Disruption

Macro Monday, report from the BCC on the impact on British businesses from Red Sea disruption, Ukraine president announces number of deaths since the Russian full-scale invasion, and data releases today.

Two Years Later

Friday feeling, what's happened in the last two years of the Russia-Ukraine conflict, and more hawkish views from the Fed.

Find out more about our foreign exchange solutions
Contact us