UK employers’ pay premiums fell in three months to July, Reuters Brightmine survey shows

(Reuters) – Wage awards given by British employers fell in the three months to July, according to a survey on Wednesday that matched Bank of England forecasts of a slowdown in wage growth.

Average basic pay settlements in the three months to July were 4.5% higher than a year earlier, the smallest rise in the three months to April and down from 5% in the three months to HR data provider Brightmine said in June.

Payment offerings could slow further by 2025, Brightmine said.

“Employers who have made wage awards so far this year have already reacted to the lower inflation environment by implementing lower wage awards than last year,” said Sheila Attwood, senior content manager at Brightmine.

“This practice is likely to continue among those closing deals later in the year, with this group also looking set to accept increases at a lower level than seen in the year to date,” she added.

A recent survey by the Chartered Institute of Personnel and Development showed that employers plan to increase wages by 3% next year, while a Bank of England survey of businesses indicated a 4.1% rise.

Official data last week showed British wages rose at the slowest annual pace in almost two years in the second quarter of 2024 and there was a surprise drop in unemployment, albeit based on a survey that is undergoing a major revision.

When it cut interest rates on August 1, after holding them at a 16-year high of 5.25% for almost a year, the BoE said it would continue to keep a close eye on wage growth. Investors see about a one-in-three chance of a rate cut in September.

Payout for the official earnings measure is still growing at almost double the pace the BoE sees as compatible with keeping inflation at its 2% target.