Pay cuts on cards as deflation fears grow

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As the recession bites, up to one in 10 firms is looking at blocking pay rises, says Incomes Data Services. Decisions on increases are also being delayed, IDS adds.

Average pay is rising at a much slower rate than a year ago. With economists saying deflation is a real possibility, bosses hope they may be able to cut pay.

The Retail Prices Index, which measures inflation, is at just 0.1%, and is expected to go negative later this month - meaning that prices are falling.

Adam Lent, head of economics at the TUC, said the trend to freeze pay was becoming "increasingly widespread". He added that "to a certain extent" it was quite understandable.

BT last week said its 100,000 staff would not get a pay rise.