(Reuters) – Pay awards granted by British employers fell during the three months to July, according to a survey on Wednesday that chimed with Bank of England forecasts for slowing wage growth.
Median basic pay settlements in the three months to July were 4.5% higher than a year earlier, the smallest rise since the three months to April and down from 5% in the three months to June, human resources data provider Brightmine said.
Pay deals were likely to slow further going into 2025, Brightmine said.
“Employers that have made pay awards so far this year have already reacted to the falling inflation environment by putting in place lower pay awards than made last year,” said Sheila Attwood, senior content manager at Brightmine.
“This practice is likely to continue among those concluding deals later in the year, with this group also looking like they will agree increases at a lower level than those seen in the year so far,” she added.
A recent survey by the Chartered Institute of Personnel and Development showed employers planned to raise pay by 3% over the coming year, while a Bank of England survey of businesses pointed to a 4.1% rise.
Official data last week showed British pay grew at its slowest annual pace in nearly two years during the second quarter of 2024 and there was a surprise drop in unemployment, albeit on a survey that is undergoing a major overhaul.
When it cut interest rates on Aug. 1 after keeping them at a 16-year high of 5.25% for nearly a year, the BoE said it would continue to keep a close eye on wage growth. Investors see a roughly one-in-three chance of a September rate cut.
Pay on the official earnings measure is still growing at nearly double the pace the BoE thinks is compatible with keeping inflation at its 2% target.
