UK wage premiums remain at lowest level in two years, Reuters IDR survey shows

LONDON (Reuters) – Pay deals by British employers held to their lowest level in two years in the three months to August, according to a survey that could reassure the Bank of England as it considers whether to cut from new interest rates.

Incomes Data Research said Wednesday that the average payout by large employers held steady at 4.0 percent for the second month in a row.

Average wage premiums in the public sector were 4.5%, above those in the private sector which slowed to 4.1%.

“The different results in the private and public sectors reflect the pay cycle between the two, with the public sector currently in the ‘recovery’ phase after a long period where pay awards have lagged behind those in the private sector,” Zoe Woolacott, senior researcher at IDR, said.

Finance Minister Rachel Reeves announced 9.4 billion pounds ($12.53 billion) in above-inflation pay rises for public sector workers, including teachers and doctors, shortly after Labor won the election parliament from July.

Official figures last month showed UK private sector pay growth fell to a more than two-year low of 4.9% in the three months to July.

The BoE is monitoring wage growth and expects private sector wages to fall to 3% at the end of 2025.

The central bank, which cut its key rate in August for the first time since 2020 but kept it at 5 percent on Sept. 19, is expected to cut borrowing costs by another quarter of a point at its November meeting.

IDR’s analysis was based on 39 wage contracts covering more than 740,000 workers between June 1 and August 31.

($1 = £0.7505)