Economic Issue

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The Increase in the UK Wages Above the Inflation Due to Brexit as an Economic Issue
Article’s Title: “UK wages soon to catch up with inflation, Bank of England survey finds”
Q1
It is reported that there will be an increase in wages more than inflation in all segments apart from Brexit-hit construction. British employees should expect the highest annual increase in wages in ten years because the growing minimum wage and shortages of workers eventually start raising wages more than inflation. Besides, in 2018, firms are set to raise wages by 3.1 percent as compared to 2.6 percent in 2017 (Partington 1). The survey indicated that pay rise across all sectors was expected except for the construction industry, which is entertaining economic downturn during dropping levels of work since the Brexit. The indications of pay rise have been examined to validate increasing rates of interest from the bottom level in ten years. In the same vein, the central bank mentioned that it might raise the borrowing cost earlier and more significantly than anticipated in the past to offset inflexibly high inflation (Partington 1). Similarly, the report also shows that rise in employees’ wages should start to pressurize inflation this year, counteracting a slow drop in the price growth that remained constant after the EU referendum, the time when the unexpected fall in the pound lifted the food and fuel import cost to Britain.
It has also been noted that hiring challenges among companies increased and the highest pay increases were expected among consumer service companies, which are expected to have more employees on the minimum wage that is likely to increase from £7.

50 to £7.83 at the start of the second quarter of 2018 (Partington 1). The expected changes in the wages come following the warning of the International Monetary Fund (IMF) over the UK economy status as Britain leaves the EU, encouraging ministers to enhance education, transport systems, and invest more in research and development to counteract the Brexit impact. The IMF’s warning comes when Boris Johnson, the foreign secretary, supports a reintroduced justification of Brexit. It also occurs following the launch of an industrial approach by the government in 2017 to uplift expenditure on skills, infrastructure, and research programs. The international competition often stimulates companies to foster their efficiency and increase spending, whereas immigration assists in offering these firms with skilled and required workers. Nevertheless, the alterations merging from Brexit could damage the economy. Finally, the IMF held that a 40 percent drop in financial service exports to the EU as an effect of the UK quitting the single market, whereas manufacturing companies like automotive dealers that depend on foreign suppliers could be adversely affected if trade with EU associates turns to be more costly or is undermined by complex new regulations (Partington 1). There has also been a drop in the level of investment of British companies as they wait for the nature of the future bond between the EU and UK, regardless of the current upsurge in the global economic boom.
Q2
The issue being discussed affects or is affected by several individuals, groups, and organizations. The first stakeholder is British employees. These workers are directly affected by the pay growth, changes in the inflation rate, economic growth, and the nature of recruitment conducted by companies. The second stakeholder is the companies. British organizations, including those operating in the manufacturing and service sectors, as well as private-sector employers, are forced to revise the wages they offer to their workers. Companies are also affected by the changes in the labor availability and supply from the foreign destinations. The other stakeholder group includes the individuals who have offered opinions on and perception of the issue of pay rise and Brexit. Examples of these individuals are Mark Carney (central bank governor) and Boris Johnson (foreign secretary). Besides, the International Monetary Fund and Central Bank, together with the Bank of England representatives have offered their views of the expected pay rise and the relationship between Brexit and inflation (Partington 1). The Bank agents, for example, have taken part in a survey validate the views.
Q3
The primary issues in this article relate to the Brexit and its influence on the pay growth, inflation, and how employers will recruit more workers. The first issue is that the British employees are expected to realize highest annual wage growth in ten years because of the growing minimum wage and workers scarcity, which push the pay above inflation. The second primary issue is the there will be a need by the central bank to raise the borrowing cost to offset the high inflation (Partington 1). Aside from that, the pay rise for workers will weaken inflation in 2018 and counteract a gradual fall in price growth. There is also a need to enhance transport infrastructure, ensure heavier investment in research and development, and improve education to thwart the Brexit effect. The impact of Brexit is, however, expected, despite the launching of an industrial tactic in 2017 by the government to enhance investment in research projects, skills, and infrastructure (Partington 1). Finally, the IMF alleges that there will be a 40 percent reduction in financial service exports to the EU due to the exit of the UK from the single market, as manufacturing companies also hard-hit by the complicated new trade policies.
Q4
The Bank of England’s agents as one of the stakeholders hold that the wages are set to increase above the inflation rate, i.e., more than 3 percent (Partington 1). They indicated that the phenomenon would occur in all segments of the economy except for the construction sector. In the same vein, the position of the central bank is to raise the cost of loans earliest and more significantly than expected before to offset the high rate of inflation. Next, Mark Carney, the central bank governor, also holds that the rise in employees’ wages should start placing pressure on 2018’s rate of inflation to thwart the slow drop in the price growth (Partington 1). Again, the position IMF is that minister should advance the transportation network, inject more funds into the research and development activities, and enhance the education facilities.
Q5
The IMF’s interest relates to the growth of the UK’s economy. It released a signal, encouraging the government to improve its social amenities and infrastructure to tackle the adverse impacts of Brexit, as a way of justifying its healthy UK economy interest. Besides, the foreign secretary, Boris Johnson, has been in support for Brexit and would be interested in facilitating programs to offset any adverse impact of Brexit. Further, the central bank governor, Mark Carney, has the interest of ensuring a fall in inflation rate thwart the price increases through the growth in employees’ wages (Partington 1). The British workers, on the other hand, are interested in the pay rise and fulfillment of the minimum wage policy. Finally, the British companies, such as the automotive manufacturers, are interested in the improvement of business efficiency and creation of a favorable environment for conducting business, including fair trade rules and availability of foreign suppliers, to boost their productivity and profitability, thereby standing a chance to meet the pay growth for their workers.
Q6  
It can be said that the stakeholders have common interests in seeing a healthy UK economy through the development of the social amenities and infrastructure like education and transport networks. For instance, the IMF and central bank governor, Mark Carney, are both interested in increasing investments in research and development, skills, infrastructure, and friendly trade rules to boost the economic development in the region (Partington 1). Moreover, manufacturing companies and workers are interested in improving business efficiency to boost the organizations’ profitability, thereby offsetting the impact of Brexit.

Works Cited
Partington, Richard. “UK Wages Soon To Catch Up With Inflation, Bank Of England Survey Finds.” The Guardian, 2018, https://www.theguardian.com/business/2018/feb/14/uk-wages-soon-to-catch-up-with-inflation-bank-of-england-survey-finds.