Over half of UK businesses to raise pay this year

Over half of UK firms are planning to raise wages over the coming year, according to a study by Barclays.

57 per cent of the 684 businesses surveyed say they’ll up wages, with 39 per cent planning increases across the board.

Kevin Wall, co-head of corporate banking origination at Barclays, said:

After an extended period of wage freezes, which have been tough for employees, it’s good to see that so many employers will be increasing wages in the coming year.

But he added that, while this can “only have a positive impact” on morale, “it will increase inflationary pressure as the year progresses.”

Last month inflation fell to the government’s target of two per cent for the first time in over four years.

And last week’s unemployment announcement saw the rate fall 7.1 per cent. The government set seven per cent as a threshold for when it would consider upping rates.

Before the data, just 14 per cent of firms answering the survey thought levels would fall sufficiently to mean an interest rate rise this year. 32 per cent thought a rise would be next year, with 44 per cent of the biggest companies asked of the opinion it wouldn’t happen until 2016.

Wall commented:

Whilst no one knows when interest rates will rise, businesses should not be complacent. It would be prudent for firms to ensure they have sufficient cash flow to absorb the increase when it comes.

When it came to employee pressure because of rising living costs, most respondents (52 per cent) said that wage pressure from employees wasn’t an issue - although 17 per cent did see it as a major concern.