Pay rises for public sector workers should be limited, as chancellor Rachel Reeves prepares for a challenging budget, Barclays Bank’s chief executive has said.
“We need to curb expenditure at the government level,” CS Venkatakrishnan told the Financial Times, adding that ministers needed to bear down on rising public sector wages. “We need to find a way to curb wage inflation,” he said, emphasising that it was an issue across the UK economy.
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Venkatakrishnan said that, while the government needed to restrict rising public sector wages, the inflationary impact of pay rises was an issue across the UK economy.
Although overall UK wage growth has slowed in recent months, it is still running at an annual rate of 5.7% in the public sector, excluding bonuses, well above the private sector average of 4.8%, according to ONS figures from April to June.
It is also up on the previous three-month period, when it was 5.5%. Total earnings growth was 5.3% for the public sector in April to June 2025, the same as the previous three-month period.
Annual average total earnings growth was 4.7% for the private sector in April-June. This was down on the previous three-month period, when it was 5%.
Meanwhile, unions continue to seek further increases to make up for years of pay erosion.
The UK economy flatlined in July, according to the Office for National Statistics, having grown by 0.4% in June. This, however, was expected after the UK became the fastest-growing G7 economy in the first part of the year.
The ONS said that growth in the services and construction sectors in July was offset by a 0.9% fall in the production sector, which includes manufacturing.
The Barclays chief’s comments on inflation echo those made by Reeves, who told ministers in a cabinet meeting on Tuesday that they had to resist wage demands from the public sector and support her fiscal policies.
Venkatakrishnan added that the banking sector should not be a target of further taxation. “UK banks are taxed more than banks anywhere else,” he said. “How much more are you going to squeeze this?”
Banks are concerned that the industry’s reliable profits, fuelled by higher interest rates, could make it one of the targets for tax increases as Reeves comes under pressure to raise taxes to address a hole in her fiscal plans.
Last month, UK bank shares tumbled, cutting the combined market value of some of the biggest companies in the sector by more than £6bn, as fresh calls for a windfall tax on large lenders in the budget worried investors.
Luke Hildyard, executive director of the High Pay Centre think tank, said: “Someone happily accepting a pay package of £10.5 million doesn’t really have the moral authority to tell nurses and teachers and local government workers they shouldn’t get a pay rise.
“It would be a lot easier to fund decent wages for public sector workers if the wealth of multi-millionaires were taxed more effectively. So if the Barclays CEO is concerned about the sustainability of public finances, he would look a lot less crass and hypocritical if he used his position to argue for a wealth tax on the super rich instead.”
Paul Nowak, general secretary of the TUC, said: “The prize for the most tone-deaf comment of the year goes to CS Venkatakrishnan. This banking boss has some brass neck. It’s frankly insulting for him to call on nurses, teachers and paramedics to tighten their belts when he’s just pocketed a bumper pay rise.”
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