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Pay rising faster than inflation as Bank warns on growth

Average earnings are rising faster than the rate of inflation after years of falling living standards, new figures show.

The Office for National Statistics data came as Mark Carney, the Governor of the Bank of England (BoE) said inflation is more than likely to fall below 1%, and economic growth will be slower than previously expected.

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BoE: 'Lower expectations' for GDP growth

The Bank of England also said its slightly lower expectations for gross domestic product (GDP) growth reflected the weaker global outlook - amid stagnation in the eurozone and slowing growth in China.

Private sector domestic demand was also seeing a "softer profile" despite the recent push back in expectations for an interest rate hike.

The report projected solid growth in consumption as households reduce savings but that there remained a risk that they would not be willing to do so "particularly if concerns around the economic outlook build".

Meanwhile, recent weakness in the housing market was bearing down on investment in the sector.

Business investment, though still strong, would be slower than had been previously expected "reflecting the weaker and more uncertain global backdrop".

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