UK payrolls are the lowest in nearly two years, Reuters’ IDR survey shows

By Suban Abdulla

LONDON (Reuters) – Wage awards from British employers fell in the three months to July, according to a survey that showed an official gauge of wage growth should keep the Bank of England on track to cut interest rates later this year .

Incomes Data Research said on Thursday that the median pay out by large employers fell to 4.0% in the three months to July, the lowest since August 2022 and from 4.8% in the three months to June.

The latest figures no longer include salary awards that took effect in April, the most popular month for salary setting, when 16% of awards were worth 9% or more, partly because of the 9.8% increase in the UK minimum wage.

Zoe Woolacott, senior researcher at IDR, said wage levels had yet to catch up with the sharp rise in the cost of living in 2022 and 2023, despite current consumer price inflation being close to the BoE’s 2% target.

“Prices for items like food, as well as mortgages and rents, remain higher than before the pandemic,” Woolacott said.

“This keeps the pressure on employers to give their employees a pay rise that compensates them to some degree for the higher cost of living.”

Data from the Office for National Statistics on Tuesday showed that UK pay growth cooled in the three months to July to a more than two-year low of 5.1%.

The BoE, which is expected to keep interest rates at 5% on September 19, is keeping a close eye on wage growth. Private sector wages are expected to fall to 5% at the end of this year and to 3% at the end of 2025.

The IDR analysis was based on 39 wage contracts that covered more than 700,000 employees and came into effect in May. July 1 and 31.