UK wage growth accelerates in final quarter of 2024

Raunaq Mohammad

3rd March 2025

Written by Raunaq Mohammad

Wage growth accelerated at the end of last year in the UK, according to official data that economists claimed would reinforce the Bank of England’s (BoE) gradual approach to cutting interest rates.

Average weekly earnings in the three months leading up to December 2024 excluding bonuses were 5.9% higher than a year earlier and up from 5.6% in the three months leading up to November.

As shown by the Office for National Statistics, wage growth was fastest in the private sector where average earnings, excluding bonuses, rose by 6.2%.

In the same time frame, public sector wages grew by a smaller 4.7% in comparison. The BoE had forecasted private sector wage growth of 6.3% for this period of time which had turned out to be a heavy overestimate.

The upward pressure on pay came as separate as ONS figures showed that the jobs market was more resilient than expected in December with the decline in payrolled employment revised to 14000 from an initial estimate of 47000.

The jobs figures are closely monitored to assess the impact of Rachel Reeves’ October budget on the labour market. The chancellor increased employer’s national insurance contributions and raised the national minimum wage.

Modupe Adegbembo, economist at Jefferies said: “We think the ongoing strength in pay is likely to keep the BoE cautious, and we expect the BoE to remain on hold in March and deliver its next cut in May.”

Official data showed that employment vacancies fell by 9000 in the three months leading up to January from the three months leading up to October. In addition to this, vacancies also remained 23000 higher than immediately before the coronavirus pandemic.

Britain’s unemployment rate, based on a survey that the ONS is overhauling and is no longer considered an accurate indicator held at 4.4%.