British employers are trimming pay awards in the three months to April, adding to evidence that the country's labour market is cooling. The moderation in settlements offers some relief to the Bank of England as it monitors domestic inflation pressures alongside rising energy price risks linked to the war in Iran.
Highlights
- Median pay settlement in the UK fell to 3.0% for the three months to April, down from 3.4% in early 2026, according to Brightmine.
- Official data shows UK average weekly earnings excluding bonuses rose 3.4% year-over-year in early 2026, marking the slowest pace since 2020.
- The Bank of England is monitoring moderating wage growth as domestic pay trends influence its inflation assessment amid elevated energy price risks.
April settlements point to softer wage pressure
As reported by Brightmine, the median pay deal stands at 3.0% in the three months to April, down from a revised 3.4% in the first three months of 2026. That brings settlements back to levels last seen in mid-2025 after seven rolling quarters above the 3.0% mark.The decline in the three-month median is driven mainly by April agreements, a key month for annual pay settlements across the UK economy. Brightmine says its reading is based on 169 pay deals introduced between February 1 and April 30, covering 2.7 million employees.
Sheila Attwood, senior content manager of data and HR insights at Brightmine, says the return to a 3% median pay award suggests many organisations are moving toward a more sustainable pay position after several years of elevated settlements.
Bank of England watches labour market signals
The Bank of England is closely watching pay awards, especially in April, as it assesses inflation pressure in Britain's economy. Investors see the UK as highly exposed to higher energy prices caused by the war in Iran, making domestic wage trends a key part of the rate outlook.Official data published on Tuesday shows average weekly earnings excluding bonuses rise by 3.4% in the first three months of 2026 from the same period a year earlier. That is the weakest annual increase since 2020 and adds to signs that wage momentum is easing.
Our earlier report on the European Commission’s fertiliser support and stockpiling plans explained how Brussels was preparing emergency aid and policy tweaks to shield farmers from soaring fertiliser and gas costs tied to the Iran war. It also flagged that prolonged supply disruptions could squeeze planting decisions and ultimately filter through into higher food prices across Europe.
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