UK Pay Growth Holds Steady at 3% Amid Economic Shifts

British employers maintained pay increases at 3% during the three months to March, marking the fourth consecutive rolling quarter at this rate, according to new data from human resources analytics firm Brightmine. This figure also represents the joint-lowest rate of increase since December 2021, offering a potential sign of easing wage inflation—something likely to be welcomed by the Bank of England (BoE) as it weighs future interest rate cuts.

Despite significant policy changes taking effect in April—including a rise in national insurance contributions and a near 7% hike in the national minimum wage—there has been no immediate shift in employer wage strategies. “Currently the data isn’t showing any signs of a knee-jerk reaction to recent national insurance changes,” noted Sheila Attwood, Brightmine’s senior content manager. However, she added that many employers are adopting a “watch and wait” approach, suggesting potential adjustments may emerge later in the year.

The BoE is closely monitoring wage trends as it assesses the extent to which inflationary pressures in the labor market are subsiding. A clearer picture is expected in the second half of 2025, which could influence the central bank’s anticipated interest rate decision on May 8. Brightmine’s analysis covered 125 pay settlements impacting approximately 192,000 employees, revealing a shift toward more modest pay deals, particularly at the lower end of the pay spectrum.

Pic Courtesy: google/ images are subject to copyright