UK Employers Plan 4% Wage Increase
According to a recent survey, British employers are expecting to raise wages by 4% over the next year, which is similar to previous expectations. This suggests that businesses are cautious about taking on higher labor costs.
In the private sector, median pay settlements are expected to remain at 4%, while in the public sector, they are projected to stay at 3%.
Although consumer price inflation slowed to 3.2% in March, the Bank of England anticipates further easing to around 2% in April due to reduced energy prices. Despite this, economists believe that wage growth may slow down in the coming months as inflation falls and the labour market slows. The Resolution Foundation think tank also warned that the current growth in inflation-adjusted wages may not be sustainable unless productivity improves.
Meanwhile, a Bank of England survey showed that employers expect to raise wages by 4.6% over the next year, the smallest increase since May 2022. Despite holding interest rates steady, the Bank of England is closely monitoring wage growth as it could contribute to inflation.