UK pay growth steady at 4% but expected to slow in 2025

Pay increases offered by British employers remained steady at 4% in the three months leading up to November, but they are expected to slow in 2025 as companies adjust to higher tax burdens introduced in the government’s latest budget, according to a Brightmine survey.

• Current Pay Trends:

  • Median pay awards held steady at 4% for the fifth consecutive month (down from 6% in 2023).

• Future Outlook:

  • Pay growth likely to slow in 2025 due to higher employer taxes and a 7% minimum wage increase starting in April.
  • Brightmine forecasts median pay awards at 3% for 2025, down from 4.5% for 2024.

• Economic Context:

  • Rising wage pressures persist; official data shows earnings growth accelerating.
  • Bank of England expected to hold interest rates in December (the meeting is Thursdat this week); inflation outlook depends on employer responses to fiscal changes.

• Employer Response:

  • 40% of employers surveyed plan to reduce salary budgets following the government’s budget measures.

• Survey Details:

  • Based on 22 pay awards (Sept–Nov), covering approximately 227,000 employees.

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Bank of England due Thursday, December 19, 2024:

This article was written by Eamonn Sheridan at www.forexlive.com.