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UK Employers Plan 2026 Pay Rises Around 3%–3.5%, Survey Shows

The wage intentions reinforce BoE caution on cutting rates.

Skyscrapers of the Canary Wharf commercial district are seen with The Shard building and construction cranes reflected in a perimeter glass wall of the viewing area of Garden at 120, in the City of London financial district, in London, Britain, September 23, 2025. REUTERS/Toby Melville
A third of employers will give their staff a lower pay settlement
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Overview

  • Incomes Data Research says 39% of firms plan pay increases of 3.0%–3.49%, with another 22% targeting 3.5%–3.99%.
  • The median expected pay award is 3.4% for 2026, edging up from 3.3% reported for 2025.
  • The survey captured responses from 121 employers representing about 2.8 million workers, collected in November and December.
  • Official figures show annual inflation rose to 3.4% in December as private‑sector regular pay growth slowed to 3.6% in the three months to November.
  • Economists expect the Bank of England to hold the Bank Rate at 3.75% this week, and MPC member Megan Greene has warned that pay growth much above 3% risks stoking inflation.