Pay growth in Britain accelerated to 6% year-on-year in late 2024, surpassing economists' predictions and significantly exceeding inflation. Regular pay growth also rose to 5.9%, indicating positive trends across both private and public sectors. This real wage growth of 3.4% could benefit households, but it poses challenges for the Bank of England, which recently reduced interest rates amid ongoing inflation concerns. Employment levels have slightly improved, yet unemployment has ticked upward, and rising benefit claims present a complex economic situation for policymakers to navigate carefully.
Growth in pay, excluding bonuses, rose for a third consecutive time, with increases seen in both the private and public sector. After taking account of inflation, real pay growth also increased slightly.
While this uptick will hearten many households, it may fuel lingering anxieties at the Bank of England, which cut interest rates earlier this month but remains wary of ongoing inflationary pressures.
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