UK Pay Rise Forecast 2026: How Much Your Salary Could Increase This Year
New research has revealed how much UK employers expect to increase staff salaries this year, providing crucial insights for workers across the nation. The comprehensive study from Incomes Data Research (IDR) offers a detailed picture of pay rise expectations across different sectors and organisations.
Employer Expectations for 2026 Pay Awards
The survey findings indicate that 28% of UK employers anticipate giving higher pay rises compared to what they awarded in 2025. This represents a significant proportion of businesses planning to increase their salary budgets for hard-working employees.
Meanwhile, 44% of employers expect pay increases to remain at similar levels to last year, suggesting stability in many sectors. However, 28% of organisations anticipate handing out lower pay rises than in the previous year, reflecting ongoing economic pressures.
Pay Rise Percentage Breakdown
The research provides detailed insights into the expected percentage increases:
- 39% of respondents forecast their pay rises will fall between 3% and 3.49%
- 22% of participants expect slightly higher increases of 3.5% to 3.99%
- Just 11% of the sample anticipate pay awards worth 4% or more
These figures highlight the cautious approach many employers are taking towards salary increases, with most organisations planning modest rises that reflect current economic conditions.
Key Factors Influencing Pay Decisions
Employers identified affordability and inflation as the main influencing factors when deciding pay rises. Zoe Woolacott from IDR commented: "Inflation is currently higher than it was a year ago and this has applied upward pressure on pay to some extent. The findings from our poll show that inflation continues to figure relatively highly in employers' concerns."
The research gathered responses from 121 organisations, with 89 employers still undecided about their 2026 pay awards. This uncertainty reflects the challenging economic environment many businesses are navigating.
Related Financial Developments
In other financial news, Santander has launched a new 98% loan-to-value mortgage specifically designed for first-time buyers. The 'My First Mortgage' product offers a five-year fixed rate deal at 5.19%, with no product fee and £250 cashback. David Morris, head of homes for Santander UK, noted: "We know that saving for a deposit remains one of the biggest hurdles to homeownership."
Meanwhile, supermarket own-label ranges have hit record sales as families look to save money on groceries. Research shows own-label goods accounted for 52.2% of all grocery sales last month, while spending on promotional items rose by 10.9% year on year.
There's also positive news for drivers and homeowners as insurance costs continue to fall. The Financial Conduct Authority reports that interest rates for premium finance have decreased by an average 4.1 percentage points since 2022, saving consumers millions annually.
These developments collectively paint a picture of an economy where both employers and consumers are making careful financial decisions, balancing inflationary pressures with practical affordability concerns.
