BOLTON trade unions says plans for regional pay deals could hit private businesses badly and weaken the area’s economy.

Bolton TUC, which represents private and public sector unions, says reducing public sector wages by one per cent would take nearly £200 million out of the north west economy — and at least £1.7 billion a year out of the national economy.

Reducing public sector wages would also hit private businesses, especially neighbourhood shops and services, it has warned.

The government has announced plans to introduce regional pay deals, which it says would more accurately reflect the nation’s economy and assist job creation.

Unison branch secretary Bernadette Gallagher said: “People with less money in their pockets have less to spend in the shops — it’s not rocket science.

“Regional pay plans would hit shops and business that need consumer spending to rise not fall.

“Ultimately this plan will lead to more local unemployment.”

The TUC says pay freezes and caps and pension contribution increases will result in public sector workers taking an average 16 per cent real terms wage cut by 2015.

It claims that the government’s argument that public sector pay is “crowding out” private sector job creation is false.

But Dr Brian Sloan, chief economist at Greater Manchester Chamber of Commerce, disagrees.

He said: “The argument over regional pay by the public sector has become very emotive but the economic impact is more likely to be positive over time rather than negative.

“Artificially higher wages in the public sector mean that it is difficult for private sector firms to recruit people with the right skills in some areas, therefore growth, investment and job creation in the wealth-creating sector of the economy is stifled.”