Pay rises above inflation would be a terrible mistake, says Hunt

The Chancellor said public sector strikes would hit the economy but argued pro-inflationary wage increases would have “more damaging” effects.

Jeremy Hunt said the impact of the junior doctors’ strike on NHS patients was “incredibly regrettable”.

But he said it would be a “horrible mistake” to agree to pay increases above the rate of inflation as it would hurt economic growth.

Official figures show that the economy was hit by strikes in February.

There has been no breakthrough in the recent public sector strike involving young doctors demanding a 35% pay rise.

The Government has said the proposal is “unreasonable” and that talks could only take place if the BMA union moves “significantly” away from it.

Speaking on the sidelines of the International Monetary Fund (IMF) spring meeting, Mr Hunt said arranging salary bonuses that don’t fuel inflation is an “incredibly difficult balancing act that we need to get right”.

Currently, UK inflation, the rate at which prices are rising, is near a 40-year high. Prices in February were 10.4% higher than in the same month last year.

Mr Hunt told the BBC that if the government sticks to its plans, “we will bring inflation below 3% by the end of the year, we will be able to get out of this period of hyperinflation”.

“The worst thing we can do for budding doctors, nurses, train drivers and teachers is to steer the economy in such a way that they are still worried about a 10% increase in the cost of living in a year,” he added.

Although the government has promised to bring inflation down, many economists have said inflation will fall naturally in the coming months due to falling energy prices. When asked about the salary demands of the doctors in training, the Chancellor pointed out that this was the case for the nurses, who initially called for a 19 percent increase, but publicly committed to a much lower figure, “which forms the basis of a fruitful discussion became”. After an IMF forecast saying the UK would be one of the worst-performing major economies in the world this year, Mr Hunt hit back, saying the IMF had “undercut the UK economy for quite some time”.

“I think since 2016 bar has undershot one every year but I think they’re just one of several forecasters. The impression I get is that they have actually spoken very publicly about their belief that the UK economy is on the right track. They welcome the budget warmly.” Other G7 finance ministers warmly welcomed what they described as a notable change in the UK’s tone and commitment from recent IMF meetings in the midst of the mini-budget crisis, under former Chancellor Kwasi Kwarteng.