Part 8: Inflation, Wages & Bank of England | The Long View with Jon Rose, Adam Lawrence & Roger Martin-Fagg

Part 8 of The Long View Podcast Episode 1. The Full Podcast will be posted on 05 June 2026.

The Bank of England has published its inflation scenarios. The press focused on the worst case. But Adam Lawrence thinks there is a scenario D that nobody is talking about – one where oil reaches levels not seen since 2008 in real terms, inflation doesn’t stop at six percent, and the wage spiral the Bank is watching for starts to turn.

The Bank’s position is clear and, as Adam noted, not unreasonable: raising rates cannot fix cost-push inflation driven by tariffs and energy prices. What it can address is a wage-price spiral – and that is precisely what it is watching for. Wages had been cooling. If inflation forces them back up, rates follow.

THE NUMBER TO WATCH: Wages, not inflation itself. If private sector pay – currently running below inflation in real terms – has to chase prices upward again, that is the trigger for further rate rises. Adam’s current base case sits at 3.75% to 4% by year end, but the tail risks are real.

The practical message is unchanged: plan for a rate environment that stays higher for longer, and treat any downward move as a bonus rather than a baseline assumption.