if we got wage inflation driven by the threat of strike in this way then that would impact the whole of the economy

Sir Edward George

Sir Edward George warned that if the government agreed to such an increase then other claims would follow.

"There has to be a real risk that other elements in the public sector first of all would say `me too.'

"That would be very difficult to stop if it were allowed to start," he told BBC TV's Breakfast With Frost programme.

Inflation threat

"I think one has to recognise that if we got wage inflation driven by the threat of strike in this way then that would impact the whole of the economy.

"We would see not just inflation higher, we would see unemployment higher and I think it would be very damaging indeed."

But he said it was a matter for the politicians and not for central bankers.

In the same interview Sir Edward said he was not concerned about the danger of a 'black hole' developing in the government's finances.

He said the UK's finances were in much better shape than those most other countries in the world and the chancellor had room for manoeuvre.

But he warned that the rise in consumer spending needed to slow down.