British employers are expecting to moderate pay increases significantly in 2027, according to a new survey from human resources data firm Brightmine, adding to evidence that the UK labour market is continuing to cool.
The survey found that 42% of employers expect pay awards next year to average between 2% and 3%, while an identical proportion anticipate salary increases in the range of 3% to 4%.
The findings are likely to be welcomed by the Bank of England, which has been closely monitoring wage growth amid concerns that persistent pay increases could contribute to longer-term inflationary pressures.
However, the outlook for slower wage growth may also raise concerns about future consumer spending and household demand, particularly as economic uncertainty continues to weigh on confidence.
Consumer sentiment remains subdued ahead of the expected change in prime minister, with Labour Party politician Andy Burnham currently the sole declared candidate to succeed Keir Starmer.
Brightmine’s median pay settlement for the three months to the end of May remained unchanged at 3.2%, matching the level recorded in the three months to April.
The survey was based on 251 pay agreements reached between 1 March and 31 May, covering approximately 3.2 million employees across a range of sectors and industries.
