Pay is rising across the UK as unemployment falls to record lows and companies have to raise wages to fill gaps in their workforce, the Bank of England believes.

Top policymakers are seeing “some evidence” that the long squeeze in incomes is coming to an end, as the effects of the financial crisis, increasingly flexible modern forms of work and caution after the Brexit vote are all fading.

“We are hearing a lot that firms are finding it more difficult to recruit, not just in isolated sectors but there is more broad-based pressure. They are starting to respond to that by paying a little more,” said Gertjan Vlieghe, who voted to raise interest rates in this month’s Monetary Policy Committee meeting.

“I am also hearing from a lot of people that their employees seem more confident to be willing to move jobs for higher pay, whereas previously they might have stuck with what they had. So it is early days, but I do think there is some evidence the process of labour market tightness leading to upward wage pressure has now begun.”

He told the Treasury Select Committee of MPs that record low unemployment is one factor causing this, as joblessness has fallen to 4.3pc, the lowest level in 42 years.