Public sector wage boost warning - Salary hikes could spur spending but slow growth through infrastructure cuts, says economist

A massive increase in public-sector salaries could become a double-edged sword for the economy, economist Keenan Falconer has warned, noting that cuts in infrastructure spending could undermine long-term recovery. Falconer said the wage increase could have an immediate multiplier effect on spending in the economy in the short term, suggesting that this could aid in boosting recovery through greater consumer expenditure. He said this could filter through the wider economy.