UK employers cut forecasts for pay deals to 4% this year

Actual pay deals for the three months to February fell to a median of 4.8%, down from 5.1% in the three months to the end of January, XpertHR said. — Reuters

LONDON: United Kingdom employers lowered their forecasts for the pay awards they will make in 2024, a new survey shows, which adds to signs of easing inflation pressure.

This came about yesterday, just a day before the Bank of England (BoE) was due to announce its latest interest rate decision.

The median pay forecast for British companies fell to 4% in the latest report from XpertHR, a human resources publication, compared with last year’s outturn of 6%.

BoE officials scrutinises indicators of pay, such as the XpertHR surveys, as they assessed whether inflation pressures are subsiding sufficiently for them to move more quickly towards cutting rates from 5.25%, their highest level since 2008.

Actual pay deals for the three months to February fell to a median of 4.8%, down from 5.1% in the three months to the end of January, XpertHR said.

“Our forecast indicates the value of pay awards will fall further as we head towards April, the busiest month of the year for this activity,” Sheila Attwood, pay and benefits editor at XpertHR, said.

While the median pay award forecast from employers was 4%, the mode, or most common, forecast was 5%, which suggests the outturn for 2024 could end up somewhere between the two.

Official data last week showed wages excluding bonuses grew at their slowest pace since October 2022.

But at 6.1%, the growth in basic pay was about double the rate considered consistent with the BoE’s 2% inflation target, the official data showed. — Reuters