Inflation will push unions to seek higher pay rises, Reeves is warned

Rachel Reeves has been warned that public sector unions will demand higher pay increases to compensate for accelerating inflation, heaping pressure on the chancellor to find billions of pounds in extra funding.

- Richard Partington, Heather Stewart

The government made recommendations in December for a 2.8% pay rise for teachers, NHS staff and other public sector workers for the financial year beginning in April, saying it was a "reasonable amount", given forecasts for the economy.

However, inflation is expected to rise by more than anticipated amid a renewed squeeze on the cost of living. Figures this week are expected to show inflation climbed to 2.8% in January from 2.5% in December, and the Bank of England says it will keep rising towards 3.7% this year.

Unions are awaiting reports from the various independent pay review bodies for the public sector, which could accept the government's suggested increase or recommend higher settlements.

Paul Nowak, the general secretary of the TUC, said: "Our unions will be arguing that it needs to be more. But crucially, it needs to be more, not just this year, but there needs to be that route map for the future."