Published by Global Banking & Finance Review®
Posted on November 5, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleUK pay settlements remained at 3% in the latest quarter, the lowest in four years, with public sector awards averaging 4%.
LONDON (Reuters) -Pay settlements awarded by British employers held steady in the three months to September, according to a survey published a day before the Bank of England's interest rates decision.
Incomes Data Research said on Wednesday that the median pay rise awarded by major employers was 3% in the July to September period, holding at the joint lowest level since December 2021.
But the IDR said more than a third of pay settlements increased to 4% in the three months to September. It attributed the rise to a bigger proportion of pay rises in the manufacturing and the public sectors.
Median pay awards for the public sector averaged 4%.
"The differing outcomes in the private and public sectors suggest the public sector is currently in the 'catching-up' phase, after a lengthy period in which pay awards lagged behind those in the private sector," Zoe Woolacott, a senior researcher at IDR, said.
Official figures showed a slowdown in British pay growth in the three months to August while inflation held steady at 3.8% in September, despite the BoE expecting a rise to 4%.
BoE Governor Andrew Bailey has said the figures backed his view that inflation pressures in the economy were easing.
The central bank, which is closely monitoring wage growth, is likely to keep interest rates at 4% on Thursday. It expects private-sector pay growth of 3.75% by the end of this year.
A survey published last week also showed employers, concerned about the impact of high inflation and last year's rise in social security contributions implemented by finance minister Rachel Reeves, were planning pay awards of 3%. She is due to present the government's annual budget on November 26, which is widely expected to include further tax rises.
IDR's survey covered 35 pay deals for nearly 800,000 employees between July 1 and September 30.
(Reporting by Suban Abdulla; Editing by Muvija M)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Median pay growth refers to the middle value of pay increases across a group, indicating typical wage changes.
The Bank of England is the central bank of the UK, responsible for monetary policy, including setting interest rates.
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