Fewer than one in four UK employers expect to grant pay rises that outpace inflation this year, signaling a renewed squeeze on household purchasing power.
A recent poll indicates that only 23% of companies plan to offer above-inflation increases, with the situation even more acute for small businesses, where just 16% of firms with fewer than 50 staff anticipate delivering such raises.
The data underscores a growing divergence between headline wage figures and the actual experience of workers, particularly in the SME sector.
As small firms face margin pressure and uncertain demand, their reluctance to pass on costs through higher wages suggests that real income growth may remain subdued for the broader workforce.
This dynamic adds a layer of complexity to the labor market picture, which has otherwise appeared resilient in aggregate metrics.
For investors, the implication is a potential drag on consumer spending, a key pillar of the UK economy.