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Unions at Corus have denied that they have offered to accept a pay cut for their workers, but general pay is in danger of being pushed down along with prices as the recession takes hold.
Given today's Bank of England survey showing a record fall in the public's perception of where inflation is heading, it is no wonder that *economists and policymakers are increasingly worried about deflation - something not seen in Britain for decades.
Deflation is defined as a general drop in prices and is the opposite of inflation.
Tumbling oil and food prices and the recession are combining to bring inflation down very rapidly from its 16-year high of 5.2% in September, and many experts expect it to turn negative in 2009, at least for a period.
Economists say a short period of deflation next year would be beneficial to the economy since it would raise people's purchasing power and confidence because the pound in their pocket would go further.
The problem is that if deflation *persists, people hold off buying things, leading to falls in demand and output. Then firms, selling less, cut what they pay to staff. They have less to spend and the deflationary spiral kicks off.
As Japan found all through the 1990s, once deflation sets in, it can be harder even than inflation to get rid of.
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