BRITAIN’S most senior central banker received a mixed reception at TUC Congress yesterday when he warned interest rates are likely to increase before ministers act to ease the squeeze on workers’ pay packets.

Bank of England governor Mark Carney congratulated British unions for accepting cuts to pay and terms so that Britain remains “competitive.”

He said: “By sharing the burden, our economy is better positioned for the future. The question is whether we will seize the opportunity.”

The Canadian told Congress he expected pay growth to resume around the middle of next year.

“By the end of our (three-year) forecast, we see 4 per cent nominal pay growth on average across the economy,” he announced.

Pay growth is currently at just 0.6 per cent a year, well below the inflation rate of 1.6 per cent.

He repeatedly reiterated he had kept interest rates low due to a consciousness of workers’ struggles to stay afloat during the recession.

During the question and answer session, a GMB delegate asked if Mr Carney had been influenced in keeping a low interest rates by the proximity of the general election.

“We’re indifferent to the political cycle and who’s in government,” replied Mr Carney. This was greeted in the hall by a sea of coughs and muted guffaws.

TUC general secretary Frances O’Grady said: “Mark Carney recognised the pain felt by British workers from pay cuts deeper than any since the 1920s, and he was clear that Britain deserves a pay rise.

“His strong support for the living wage, not least by making the Bank of England an accredited living wage employer, should be heard across government and the public sector.”

But Unite general secretary Len McCluskey said the address was “slightly devoid of the real world.”

“We will continue to argue for a pay rise and against austerity. The message was somewhat depressing — we will have to work longer and get paid less.

“The speech offered little, other than saying we might get a pay rise unless things change. It was a missed opportunity to give hope to millions of working people and those struggling to find work, especially young people.”