(Reuters) – Pay deals awarded by British employers were steady in the three months to November and are likely to slow next year as companies economise to meet higher tax bills introduced by the new government’s first budget, a survey showed on Wednesday,
Human resources data firm Brightmine said the median pay award held at 4% for a fifth month running, down from 6% over 2023 as a whole.
The survey added to signs of stubbornly high pay pressures in Britain’s economy. Official data on Tuesday showed an increase in the pace of earnings growth – something the Bank of England is likely to note on Thursday when it announces its December interest rate decision.
All economists polled by Reuters think the BoE will keep rates on hold this week. The central bank has said the outlook for inflation will hinge in part on how companies respond to finance minister Rachel Reeves’ Oct. 30 budget.
She increased the social security contributions paid by employers in order to finance more spending on investment and public services. The increase kicks in from April next year – just as the minimum wage is due to rise by nearly 7%.
Brightmine – which previously forecast a median pay award of 3% for 2025, down from 4.5% for 2024 – said nearly 40% of the employers it surveyed expected to reduce salary budgets in response to the budget.
“While it’s great to see pay awards are still being offered across all industries, there’s no doubt that businesses next year are facing a tough landscape and will have to make some difficult decisions,” said Sheila Attwood, Brightmine senior content manager.
The latest data was based on 22 pay awards between Sept. 1 and Nov. 30, covering around 227,000 employees.
