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Darling calls for pay restraint Darling calls for pay restraint
(20 minutes later)
Chancellor Alistair Darling has called for restraint in pay settlements in the public and private sector. Chancellor Alistair Darling has called for restraint in pay settlements and said there is "no doubt" the UK economy is slowing.
Speaking to the BBC, he said it would be "disastrous" if we "allowed inflation to take hold".Speaking to the BBC, he said it would be "disastrous" if we "allowed inflation to take hold".
The chancellor was speaking a day after it was announced that the rate of consumer inflation was 3.3% in May, the highest level in 10 years. Rising food and fuel prices would make is a "difficult year" for consumers, the chancellor said.
The governor of the Bank of England has also warned inflation looks set to top 4% this year. He was speaking a day after consumer inflation jumped to 3.3% in May, the highest level in 10 years.
"We have got to be vigilant in relation to all pay settlements, public and private," Mr Darling told Radio 4's Today programme."We have got to be vigilant in relation to all pay settlements, public and private," Mr Darling told Radio 4's Today programme.
"If we get back into that [inflationary] spiral it will take years to get out of it," he said. "If we get back into that [inflationary] spiral, it will take years to get out of it," he said.
He also said there was "no doubt" that the UK economy was slowing down. It could even herald a return to 1970s-style inflation, he said.
The chancellor is to discuss the state of the economy when he delivers his first Mansion House speech later. FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
In his address to the City of London, he is likely to discuss inflation, the cost of oil and house prices. The chancellor blamed the rise in inflation on global factors pushing up the price of oil and foodstuffs.
Mr Darling is also likely to address concern over changes to the tax system. But he said countries needed to work together to tackle the problem.
"We need to ensure that inflation doesn’t get entrenched but that we work together to deal with oil and food prices," he said.
Economy slowing
"There is no doubt our economy is slowing down," he said.
The chancellor has forecast that the economy will grow by between 2.5% and 3% next year.
However, economists are forecasting the rate of growth will be closer to 1.3%.
He said he would be looking again at his growth figures in the pre-Budget report in the autumn.
The chancellor will further examine the state of the economy when he delivers his first Mansion House speech to the City of London later.