London Daily

Focus on the big picture.
Monday, Oct 06, 2025

UK pay growth speeds up again as BoE frets about inflation

UK pay growth speeds up again as BoE frets about inflation

Pay growth in Britain - which is being closely watched by the Bank of England as it gauges how much higher to raise interest rates - picked up more pace in the three months to November, official data showed on Tuesday.
Pay excluding bonuses rose by an annual 6.4% in the September-to-November period, the biggest increase since records began in 2001, not counting jumps in the COVID-19 period which were distorted by lockdowns and government support measures.

Pay including bonuses also rose by 6.4%, the Office for National Statistics said.

Economists polled by Reuters had expected total pay and the ex-bonuses measure to rise by 6.2% and 6.3% respectively.

The ONS said Britain's jobless rate held at 3.7%, in line with the poll, close to its lowest in almost 50 years. Employment rose by a faster-than-expected 27,000.

BoE Governor Andrew Bailey said on Monday that a shortage of workers in the labour market posed a major risk to forecasts that inflation will fall from its current levels above 10%.

The BoE looks set to raise borrowing costs for a 10 time in a row next month, and the main question for investors is the scale of the increase as it weighs up the risk of a recession.

Financial markets were mostly pricing in a half percentage-point hike in Bank Rate to 4.0% on Feb. 2 and pointed to only a one-in-four chance of a smaller 25 basis-point increase after Tuesday's data.

Sterling rose and was up by 0.1% on the day against the U.S. dollar and the euro.

"The latest labour market data maintain the pressure on the by the Monetary Policy Committee to raise interest rates by another 50 basis points next month, rather than slow down," Samuel Tombs, an economist with Pantheon Macroeconomics, said.

The ONS figures showed a wide gap between strong pay growth in the private sector and weaker increases for public sector workers, many of whom are locked in wage disputes with the government.

The number of days lost to strikes rose again in November and the period since June saw more days lost to industrial action than in any six months for over 30 years, the ONS said.

Private-sector total pay rose by an annual 7.1% in the three months to November compared with 3.3% in the public sector.

INFLATION STILL BITES

Despite the pay acceleration, the soaring rate of inflation means households are still seeing their spending power shrink.

Total pay, adjusted for the consumer prices index, fell by 3.9% between September and November compared with the same period in 2021. A larger fall had not been seen since 2009.

There were also signs that Britain's tight labour market was losing some of its inflationary heat.

Vacancies in the October-to-December period fell for a sixth time in a row and were down on an annual basis - by 85,000 - for only the second time since the lockdowns of early 2021 but were still a lot higher than before the coronavirus pandemic.

The economic inactivity rate - or the share of people not in work and not looking for it - fell in the three months to November to 21.5%, 0.1 percentage points lower than the previous three-month period.

But the rate was 1.3 percentage points higher than immediately before the pandemic.

Tombs at Pantheon Macroeconomics said the BoE might gamble that the signs of more labour market slack would translate into slowing wage growth, and its rate hikes might end in March.

"We think they will be willing to make that call - to carrying on hiking would bring its own risks - though the lack of commentary from MPC members over the last month is disconcerting," he said.
Newsletter

Related Articles

0:00
0:00
Close
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
×