While the wave of industrial action that is blighting the outlook for the public sector shows little sign of abating, the Bank of England is likely to be concerned by the inflationary nature of pay deals in the private sector.

The January employment report was published yesterday and while the jobless rate remains close to a historic low at 3.9%, it is the average earnings figure that will contribute to another hike at the next rate setting meeting.

Average earnings not including bonuses rose by 6.7% in the three months to December, and another 12.9k workers left the claimant count. The previously published claimant count figure was revised from -19.7k to -3.2k.

In the Budget due next month, Chancellor Jeremy Hunt is expected to do away with the cap on Bankers bonuses that was an EU initiative made law in 2014.

Another possible change in taxation that is expected in the Budget is a reduction in VAT. It is unlikely that it will be an across the board cut, fuel and public transport are two areas apparently being looked at.

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