Breaking News: British Employers Maintain Low Pay Settlements, Bank of England Likely to Cut Interest Rates Again
In a recent survey conducted by Incomes Data Research, it was found that pay settlements awarded by British employers remained at their lowest in two years during the three months leading up to August. This news comes as the Bank of England contemplates whether to further reduce interest rates.
Key findings from the survey show that the median pay settlement awarded by major employers held steady at 4.0% for the second consecutive month. Additionally, median pay awards in the public sector were slightly higher at 4.5% compared to the private sector, which saw a slowdown to 4.1%.
Zoe Woolacott, senior researcher at IDR, noted that the disparity in pay settlements between the public and private sectors reflects a shifting cycle, with the public sector currently playing catch-up after a period of lagging behind.
The announcement of above-inflation pay increases totaling £9.4 billion for public sector workers, including teachers and doctors, following the recent parliamentary election, has also impacted wage growth trends. Official figures revealed that private sector wage growth dipped to a more than two-year low of 4.9% in the three months leading up to July.
Looking ahead, the Bank of England is closely monitoring wage growth and anticipates a further slowdown in private-sector pay to 3% by late 2025. With expectations of another interest rate cut at the November meeting, the central bank is closely watching economic indicators to inform its decision-making.
The IDR analysis, based on 39 pay deals covering over 740,000 workers, provides valuable insights into the current state of pay settlements in the UK. As financial markets continue to react to these developments, investors and individuals alike should stay informed and consider the potential implications for their own finances. With ongoing shifts in wage growth and interest rates, it is essential to stay informed and adapt financial strategies accordingly.