Published by Global Banking & Finance Review®
Posted on January 21, 2026
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleUK employers show early signs of reduced pay increases, with deals falling to around 3%. The Bank of England monitors these trends closely.
Jan 21 (Reuters) - There are early signs that pay deals awarded by British employers have fallen to around 3% at the start of this year, data provider Brightmine said on Wednesday, from around 3.7% late last year.
The Bank of England is watching pay pressure carefully as it weighs further reductions in interest rates. Official data showed a slowing in average weekly earnings growth during the three months to November, as well as other signs of a cooling labour market.
"Early January settlements suggest most employers are still taking a cautious approach, keeping increases tightly controlled as they balance affordability with ongoing cost pressures," said Sheila Attwood, senior content manager of data and HR insights at Brightmine.
Brightmine said the median pay deal was 3.7% in the three months to December, unchanged from the three months to November.
The latest reading was based on only 10 settlements, Brightmine said, compared with over 100 during busy pay round periods, such as the months leading up to April.
"The increase to the national living wage will require higher rises for the lowest-paid workers, absorbing a larger share of pay budgets and leaving less headroom elsewhere," Attwood said.
"As a result, any movement away from current pay forecasts is more likely to be downward than upward."
(Reporting by Andy Bruce; editing by Suban Abdulla)
Interest rate reduction is a monetary policy tool used by central banks to lower the cost of borrowing. This can stimulate economic activity by encouraging spending and investment.
Average weekly earnings represent the mean amount of money earned by employees in a week. This figure is often used as an economic indicator to assess wage growth and living standards.
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