13:25

Bank of England rate-setter Gertjan Vlieghe has put households on notice for borrowing costs to rise faster than previously thought over the next few years.

Using a speech in Birmingham, the member of the Bank’s monetary policy committee said he saw a need for one or two rate hikes per year over the next few years, in comments likely to be seen as putting the Bank on track for raising the cost of borrowing in May.

One of the seven MPC members who voted to leave rates unchanged on Thursday, he said he was increasingly confident that wage growth in Britain was just around the corner. “The data have shifted further in the direction that warrants a continuation of the removal of monetary stimulus,” he said.

Gertjan Vlieghe

Although he warned there was uncertainty about the strength of the economy, particularly as the UK leaves the European Union, Vlieghe said recent surveys and figures from the jobs market had convinced him of the need for higher interest rates.

But despite the good news for workers from rising pay, he warned there was also a lower “new normal” for wage growth, as pay rises are likely to be constrained by poor levels of productivity growth in the UK.

The sluggish increase in the efficiency of British workers seen since the financial crisis - which has been poorer than other advanced economies - could mean average annual wage rises worth about 3% per year compared to about 4% previously, he said.