TAKE-HOME PAY RISE AT SLOWEST RATE

VocaLink, which processes 90% of UK salaries, said the rise was well down on the increase of 4.1% seen in 2006 and a jump of 4.6% in 2005.

Richard Cooper, head of brand and communications at VocaLink, said: "The VocaLink take-home pay index annual figure for 2007 reflects the year's turbulent economic state."

He added: "This climate looks set to continue into the new year as the global credit crunch, rising energy prices and a cooling housing market take their toll."

The annual rate at which take-home pay is increasing edged up slightly during the three months to the end of December to 3.4%, compared with 3.2% in the three months to the end of November.

The rise was mainly driven by the manufacturing sector, with workers at these firms receiving an average of 3.3% more pay in December compared with a year earlier, up from an annual growth rate of 2.9% in November.

It was the first time the rate had increased for manufacturing since June, when it peaked at 4.8%.

The rate at which pay is rising for people in the services sector remained unchanged during December at 3.3%.

Douglas McWilliams, chief executive of economics consultancy cebr, which analyses the index for VocaLink, said: "Last month, the Bank of England cut interest rates in order to reassure financial markets and the consumer.

"With 2007 showing the lowest growth in take-home pay for two years, we believe the Bank of England will cut interest rates again in the first quarter of 2008, to help the indebted consumer."