By City AM reporter The Government could need up to £10bn to cover public sector pay increases if reports of a 5.5 per cent rise prove true, an economist has warned. Independent pay review bodies are reported to be preparing to recommend such an increase for teachers and around 1.3m NHS staff, according to The Times, well above the figure the Government is thought to have been preparing for. Paul Johnson, director of the influential Institute for Fiscal Studies, said he was “not terribly surprised” by the figure, which would be in line with pay rises across the economy, and would cost an extra…