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Darling calls for pay restraint Economy is slowing, says Darling
(30 minutes later)
Chancellor Alistair Darling has called for restraint in pay settlements and said there is "no doubt" the UK economy is slowing. Chancellor Alistair Darling has said there is "no doubt" the UK economy is slowing and has warned it will be a "difficult year" ahead.
Speaking to the BBC, he said it would be "disastrous" if we "allowed inflation to take hold". Rising food and fuel prices were hitting consumers, he told the BBC.
Rising food and fuel prices would make is a "difficult year" for consumers, the chancellor said. Speaking a day after consumer inflation jumped to the highest level in 10 years, he also called for restraint in pay demands.
He was speaking a day after consumer inflation jumped to 3.3% in May, the highest level in 10 years. Mr Darling said it would be "disastrous" if we "allowed inflation to take hold".
"There is no doubt our economy is slowing down," he said.
FROM THE TODAY PROGRAMME More from Today programme
The chancellor has forecast that the economy will grow by between 2.5% and 3% next year.
However, economists are predicting the rate of growth will be closer to 1.3%.
Asked about the different in the two forecasts, Mr Darling said he would be looking again at his growth figures in the pre-Budget report in the autumn.
'Vigilant'
The governor of the Bank of England warned on Tuesday that inflation would top 4% this year before dropping back as the economy slows.
In order to combat inflationary pressures, the chancellor said workers would have to be realistic in their pay demands.
"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.
It could even herald a return to 1970s-style inflation, he said. It could even herald a return to the high level of inflation experienced in the 1970s and 1980s, he said.
FROM THE TODAY PROGRAMME More from Today programme
The chancellor blamed the rise in inflation on global factors pushing up the price of oil and foodstuffs.The chancellor blamed the rise in inflation on global factors pushing up the price of oil and foodstuffs.
But he said countries needed to work together to tackle the problem.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. "You need to make sure you don't allow inflation to become entrenched here at home and you also need to make sure we work together in relation to 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.The chancellor will further examine the state of the economy when he delivers his first Mansion House speech to the City of London later.