Finance
UK pay rises fall back in line with inflation, Brightmine says
Published by Global Banking & Finance Review®
Posted on March 19, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 19, 2025
2 min readLast updated: January 24, 2026
UK pay rises align with inflation for the first time since 2023, as employers prepare for payroll tax hikes. BoE watches for inflation trends.
LONDON (Reuters) - Pay increases granted by British employers have fallen back in line with inflation for the first time since October 2023, according to data from human resources data firm Brightmine that is likely to be welcomed by the Bank of England.
Brightmine said employers were cautious before April's rise in payroll taxes and the median pay award in the three months to the end of February held at 3% for the third consecutive rolling quarter, the joint lowest pace of increase since December 2021.
Britain's consumer price index rose by 3% in the 12 months to January the latest month for which data is available.
"The stabilisation of pay awards reflects a more cautious approach from employers as they balance wage growth and rising costs," Brightmine's senior content manager Sheila Attwood said.
A quarter of firms planned a hiring freeze or a restructuring of their teams in response to April's increase in employers' social security contributions, with some considering pay freezes and delays to increases.
Britain's minimum wage is also due to go up in April by almost 7% and almost three-quarters of employers expected a squeeze in the difference between their basic and higher pay levels, Brightmine said.
The BoE is watching for signs that inflation pressure in Britain's jobs market is abating sufficiently for it to carry on cutting interest rates. It is widely expected to keep borrowing costs on hold on Thursday after its March meeting.
Brightmine analysed 102 pay settlements effective in the three months to February 28 covering around 135,000 employees.
(Writing by William Schomberg, editing by Andy Bruce)
The article discusses UK pay rises aligning with inflation and its implications for employers and the Bank of England.
Employers are cautious, with some planning hiring freezes, restructuring, or delaying pay increases.
The Bank of England is monitoring inflation pressures in the job market to inform interest rate decisions.
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