Published by Global Banking & Finance Review®
Posted on July 22, 2025
2 min readLast updated: January 22, 2026
Add as preferred source on GoogleUK private sector pay settlements remain at 3%, leading to real-term pay cuts as inflation rises. Public sector pay is higher at 4.3%.
LONDON (Reuters) -Pay settlements by British private-sector employers held at 3% in the three months to June, representing a pay cut in inflation-adjusted terms for many workers, according to a survey published on Wednesday.
With the Bank of England watching for signs of weakening inflation pressure in the economy, the figures from wage data firm Brightmine represented the seventh monthly report in a row to show no change in private-sector pay deals.
A year ago private sector settlements were running at 4.8%.
"After a period of historically high settlements in response to inflation, we’re now seeing the return of employer pay restraint," Sheila Attwood, HR insights and data lead at Brightmine, said.
"While 3% is consistent, it's also stagnant, and real-terms pay erosion is starting to reappear for many, meaning many workers are actually worse off this year compared to inflation."
Britain's headline consumer price inflation rate rose to 3.6% in the 12 months to June, its highest in more than a year.
However, a string of reports have suggested a weakening of the labour market.
Brightmine's figures showed public sector pay settlements running at 4.3% and the threat of a strike by doctors showed that Prime Minister Keir Starmer's government remained vulnerable to public worker unions, Attwood said.
"One year in, Labour faces growing pressure to balance fiscal restraint with rising pay demands across critical services — and that tension is only set to intensify," she said.
Brightmine studied 195 pay settlements in the three months to June 30 covering more than 2.5 million employees.
(Writing by William Schomberg; Editing by Muvija M)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI).
A wage data firm specializes in collecting, analyzing, and reporting on wage and salary information across various sectors. This data helps organizations make informed decisions about compensation.
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