British employers reduce pay settlements to three percent at the start of 2025
Early data shows British pay settlements fell to three percent in January. This cooling wage pressure is a key metric for the Bank of England rate decisions.
Insights:
Brightmine reported on January 21, 2025, that early signs of pay settlements awarded by British employers in Great Britain 
GBhave fallen to approximately 3% at the start of 2025. This figure represents a measurable decline from the 3.7% recorded in late 2024. Specifically, the median pay deal was 3.7% in the three months to December, which remained unchanged from the level seen in the three months to November. This latest reading for early January was based on only 10 settlements, a significantly smaller sample than the 100 or more typically recorded during busier pay round periods such as the months leading up to April.
GBhave fallen to approximately 3% at the start of 2025. This figure represents a measurable decline from the 3.7% recorded in late 2024. Specifically, the median pay deal was 3.7% in the three months to December, which remained unchanged from the level seen in the three months to November. This latest reading for early January was based on only 10 settlements, a significantly smaller sample than the 100 or more typically recorded during busier pay round periods such as the months leading up to April.The Bank of England is monitoring wage pressure carefully as it weighs further reductions in interest rates. Investors tracking the British Pound / US Dollar and the FTSE 100 Index are keeping a close watch on these indicators for signs of a shifting UK labor market. According to Sheila Attwood sheila attwood, the senior content manager of data and HR insights at Brightmine, these early January settlements suggest most employers are taking a cautious approach by keeping increases tightly controlled. Sheila Attwoodnoted that while downward movement from current pay forecasts is more likely, the current figures are based on a limited initial data set.
