'There is no alternative': Boris Johnson says there may be tough times on route to higher wages

The PM told Robert Peston there's 'no alternative' to the risks involved with transitioning to a high wage economy

Boris Johnson has told ITV News "there is no alternative" to the risk that higher wages will fuel inflation and lead to rises in interest rates, because of the imperative of transforming the economy from a low wage one to a high wage economy.

In response to Political Editor Robert Peston saying the "transition from where we are to where you want to go will take years, and in the meantime you are reducing productivity and risking inflation - and you're actually risking interest rates going up", the PM said:

"In a famous phrase, there is no alternative. There is no alternative. The UK has got to, and we can do much, much better by becoming a higher wage, higher productivity economy."

The phrase "there is no alternative" is closely associated with Margaret Thatcher and her determination in the 1980s to drive through economic reforms that brought significant immediate costs to business and people.

The issue with what the PM's pledging is the time it will take, 'years' says Robert Peston

The prime minister said he appreciates that "many people find the going tough at the moment".

It was put him that many in the UK are "suffering, they're wondering how they're going to heat their homes and buy food - and this is happening at a time when you have cut their income by reducing the Universal Credit uplift, you’re increasing National Insurance, you’ve frozen tax allowances".

The PM hit back: "What we’re seeing actually over more than a year or so is an increase in wages - and it’s high time that it happened frankly because I think we’ve had an environment in the UK where we’ve accepted a low wage, low skill, low productivity approach, and that needs to change."

'There is no alternative': Boris Johnson on his plan for the UK economy

He pointed to a £500 million fund which had been set aside by the government to help families in hardship, but said he does not agree with bolstering the welfare state with taxpayer money.

"I would rather see people being paid more through good jobs and better paid jobs than… taking more money in tax from everyone and pushing it through the welfare system to subsidise low pay and it would be much better if pay increased," he said.

Watch Peston's interview with the PM in full:

Peston said: "The pay rises that we are seeing for HGV drivers, for fruit pickers, for people in the supply chain are actually making the country less productive because there is no investment at the moment and they are doing the same job for more money so you are actually doing the reverse of what you want to do, you are reducing productivity".

Mr Johnson replied: "Here's what needs to happen...For most of our lifetimes the UK has relied on a certain economic model which has meant per worker we're less productive. I mean it's a terrible thing to admit , but we're less productive than France, and the USA and even Italy...The answer is not to go back to the old model, that's why this is a new government with a new approach."

Addressing concerns about the UK's large numbers of job vacancies, including a lack of HGV drivers and meat processors, Mr Johnson said employers must improve conditions and start paying higher wages to encourage people to apply for jobs.

"This is, frankly, by far the best thing for this country," he said, "one of the reasons you don't have enough lorry drivers in the UK is it hasn't been a profession in which people have invested - they haven’t invested in the truck stops, people have to pee in the bushes and the rest of it.

"It hasn’t been something that people have wanted to do, and the same goes for a lot of jobs".

There are concerns HGV driver shortages, which have already caused issues with fuel supply, could soon result in empty supermarket shelves.

But the prime minister said the UK has a "fantastic supply chain, fantastically clever people work on our logistics and they will fix all these problems".

He was also asked about the UK's inflation rate, which at 3.2% is the highest in almost a decade, and the risk of interest rates rising.

Asked if he's worried, Mr Johnson said: "Let’s see where we get to.

"People have talked for a long time about these issues and we’ve seen inflationary pressures come and go and I think that we’ve got fantastically effective supply chains that will enable supply to match demand."

He added: "We have a great deal - a massive amount of resilience and imagination in this economy and we’re going to get through it very, very well."

In a bid to provide Britons with hope as they look to the winter months ahead, Mr Johnson said he "confidently" predicts "this Christmas will be considerably better than last". Peston replied: "It can't be worse. That's not a fair comparison.