Key facts
- British employers anticipate a marked reduction in pay awards for 2027.
- A survey by Brightmine found 42% of employers expect pay awards between 2% and 3% in 2027.
- The same proportion of employers expect pay awards between 3% and 4%.
- This represents a shift from recent years where 3% to 4% was the norm.
- The median pay award for the three months to the end of May was 3.2%, unchanged from the prior period.
British employers are planning to significantly scale back pay increases in 2027, according to a survey by HR data firm Brightmine. The findings suggest a cooling labor market, which could be welcomed by the Bank of England amid persistent inflation concerns.
Approximately 42% of employers surveyed anticipate pay awards averaging between 2% and 3% for 2027, with an equal proportion expecting deals between 3% and 4%. This represents a notable shift from recent years, where pay awards of 3% to 4% were considered the norm.
The median pay deal for the three months ending in May stood at 3.2%, unchanged from the preceding three-month period. However, Sheila Attwood, senior content manager at Brightmine, noted that with inflation still above the Bank of England's 2% target and close to the current median pay award, employers might face renewed pressure to offer more to support employee living standards.
The survey, which included 251 pay awards covering around 3.2 million employees, comes as consumer morale remains low ahead of a change in prime minister. Andy Burnham is currently the only candidate mentioned to take over from Keir Starmer.