Published by Global Banking & Finance Review®
Posted on October 29, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleUK employers are likely to keep pay awards at 3% due to economic caution and easing inflation pressures, according to Brightmine.
LONDON (Reuters) -Pay awards granted by British employers are likely to hold at their current 3% level over the next 12 months as caution dominates and the impact of high inflation fades, data firm Brightmine said on Wednesday.
With the Bank of England watching for weaker inflation pressure before resuming its interest rate cuts, Brightmine said only 23% of employers it surveyed expected to raise pay awards, with 45% seeing no change and 32% predicting lower settlements.
In 2023, pay awards were running at an average of 6% - double their current rate - after a spike in inflation to more than 11% in October 2022 following Russia's full-scale invasion of Ukraine.
The expected award of 3% is below the most recent reading of headline inflation which stood at 3.8% in September.
Affordability concerns and the impact of finance minister Rachel Reeves' decision to raise employers' social security contributions in her 2024 budget were capping pay awards, Brightmine said.
"The next year will test organisations' ability to remain competitive while managing tight budgets," Sheila Attwood, Brightmine senior content manager, said, noting a growing focus on benefits, recognition and skills-based pay.
Brightmine said pay awards held at 3% in the three months to the end of September, extending the pattern seen in 2025.
Its forecasts for the next 12 months was based on research conducted in August and September, covering 213 organisations with a total of 600,000 employees.
Official pay data has shown a slowing of overall earnings growth which BoE Governor Andrew Bailey has said backed his view that inflation pressures in the economy were easing.
A survey published by the Confederation of British Industry on Wednesday showed firms expected activity to fall over the next three months, extending a run that began in late 2024, with uncertainty over Reeves' November 26 budget a cause for concern.
(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).
Pay awards refer to the increases in salary or wages granted by employers to their employees, often determined through negotiations or surveys.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
Employers' social security contributions are payments made by employers to fund social insurance programs, which provide benefits such as pensions and unemployment insurance.
The Consumer Price Index (CPI) measures changes in the price level of a basket of consumer goods and services, used to assess inflation.
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