British employers plan to scale back pay increases next year, according to a survey that is likely to encourage the Bank of England as it seeks further signs that inflation pressures in the economy are easing.
Almost two thirds of employers are planning to offer employees smaller pay increases in 2025 than in 2024, according to the survey by Incomes Data Research, an independent data and analysis organisation.
Last year, 53 per cent of employers said they intended to scale back pay rises.
The BoE, which held interest rates at 5 per cent on September 19, after cutting them in August, is watching wage growth closely as it moves cautiously with further reductions in borrowing costs.
IDR said 45 per cent of organisations plan to raise pay by between 3 per cent and 4 per cent in 2025 as the scarcity of candidates to fill jobs eases a bit and inflation weakens.
The survey was based on responses from 100 employers, 72 per cent of whom were in the private sector.
IDR said earlier this month that the median pay settlement awarded by major employers dropped to 4.0 per cent in the three months to July, the lowest since August 2022 and down from 4.8 per cent in the three months to June.
