BoE's Charlie Bean: UK Economy 'Not Yet Fighting Fit'

Britons should finally see their wages rise again in 2014 after several painful years of below-inflation pay growth, according to Bank of England policymaker Charlie Bean.

Deputy Governor Bean also said that the BoE would hold down inflation rates and inflation in the meanwhile, to help the current bud of an economic recovery fully flower into a sustainable turnaround from the post-financial crisis slump.

"The economy is off the ropes but not yet fighting fit. Households are under the cosh but workers should start getting pay rises," Bean told The Sun newspaper in an interview.

Regular pay is rising at an annualised rate of 0.8%, against consumer price inflation of 2.2% in October. Wages have been in real terms decline since 2009.

Under the leadership of Governor Mark Carney, the Bank of England has introduced a forward guidance regime to its monetary policymaking.

Policymakers have told markets they will not even consider raising the base rate from its record low 0.5% until the unemployment rate falls below a 7% threshold. This guidance is subject to three "knockouts", including a sudden worsening of the medium-term inflation outlook.

"We are in no rush to raise rates," said Bean. "Households and businesses can have the confidence to invest."

Minutes from the rate-setting Monetary Policy Committee meeting in November show concern over the current recovery, which has seen GDP growth accelerate across the first three quarters of 2013.

There must be a "successful handover" in the medium term from consumer spending to business spending for a sustained recovery, said the minutes, and domestic business spending would "play a crucial role in underpinning the recovery in the medium term".

The UK economy also "remained vulnerable to disorderly adjustment in the euro are and in some emerging economies".