Breaking News
Investing Pro 0
🙌 It's Here: the Only Stock Screener You'll Ever Need Get Started

UK pay growth slows as Bank of England mulls rates pause

Published Mar 14, 2023 03:35AM ET Updated Mar 14, 2023 04:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Workers cross London Bridge during the morning rush hour in London, Britain, March 10, 2023. REUTERS/Toby Melville

By William Schomberg and Sachin Ravikumar

LONDON (Reuters) - Growth in pay in Britain - which the Bank of England is watching closely as it weighs up whether to pause its run of interest rate hikes next week - lost pace in the three months to January, official data showed on Tuesday.

Basic pay, excluding bonuses, rose by 6.5% compared with 6.7% in the three months to December, representing the first slowdown in the that measure since late 2021.

Total pay grew by an annual 5.7% in the November-to-January period, slowing from 6.0% in the previous figures and the weakest increase since the three months to July last year, the Office for National Statistics said.

Economists polled by Reuters had expected basic and total earnings to rise by 6.6% and 5.7% respectively.

Britain's unemployment rate held at 3.7% in the three months to January, close to its lowest in almost five decades, the data also showed.

Economists polled by Reuters had mostly expected the rate to rise to 3.8%.

Graphic: Jobless rate unchanged-

The BoE is expected to raise borrowing costs on March 23 by a further quarter of a percentage point to 4.25% although investors have cut their bets on such a move sharply after the collapse of U.S. lender Silicon Valley Bank.

Interest rate futures showed investors were putting the chance of the BoE pausing its rate hikes next week at about 40% at 0830 GMT while a quarter of a percentage point increase in borrowing costs was seen as a 60% possibility.

Yael Selfin, chief economist at KPMG UK, said while the ONS data showed a slowing of pay growth, more recent measures showed little change recently.

"Coupled with stronger-than-expected GDP data, this should provide enough evidence for the Bank to raise rates when it meets next week," Selfin said.

But Martin Beck, with forecasters the EY ITEM Club, said a BoE rates pause was now likely after 10 back-to-back hikes.

"These moves follow other developments, including an unexpectedly significant decline in the services sector inflation in January," Beck said.

Sterling rose against the dollar and the euro shortly after the data before falling back.

Finance minister Jeremy Hunt is expected to announce measures in his budget statement on Wednesday that will seek to get more people into work, easing the inflationary pressure in the labour market.

"The jobs market remains strong, but inflation remains too high," finance minister Jeremy Hunt said after the data was published, a day ahead of his budget speech.

"Tomorrow at the budget, I will set out how we will go further to bear down on inflation, reduce debt and grow the economy, including by helping more people back into work."

Tuesday's data showed earnings were further diminished by an inflation rate that stood above 10% in January.

The ONS said basic pay, when adjusted for inflation using the consumer prices index, fell by 3.5%, one of the largest falls since records began in 2001. Total pay fell by 4.4% in real terms, the biggest drop since early 2009.

Graphic: Real pay slips further-

There were some signs of a further easing of the tightness in the labour market with the economic inactivity rate - measuring people out of work and not looking for it - falling by 0.2 percentage points to 21.3%, driven mostly by young people.

Vacancies decreased for the eighth time in a row in the three months to February, falling by 51,000 from the previous three months to 1.124 million.

(Graphic by Sumanta Sen; Editing by Kate Holton and Christina Fincher)

UK pay growth slows as Bank of England mulls rates pause

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email