UK pay awards decline as wage growth slows

Pay awards granted by British employers decreased in the three months to July, according to a survey by human resources data provider Brightmine.

Median basic pay settlements rose by 4.5 per cent year-on-year, the smallest increase since April and down from 5 per cent in the previous quarter.

Brightmine forecasts further slowing in pay deals into 2025, noting that employers have adjusted awards in response to declining inflation. Sheila Attwood from Brightmine indicated that this trend of lower pay awards is expected to continue.

Surveys by the Chartered Institute of Personnel and Development and the Bank of England show varying projections for future pay increases, at 3 per cent and 4.1 per cent, respectively.

Recent official data also highlighted the slowest annual pay growth in nearly two years, despite a surprise drop in unemployment.

The Bank of England, which cut interest rates to 5 per cent on August 1, will monitor wage growth closely. Investors anticipate a potential rate cut in September as current pay growth remains higher than the 2 per cent inflation target set by the BoE.