The latest data from Brightmine, the HR data and insights provider, reveals that the median basic pay award has settled at 3.3%, for the three months to the end of February.
However, forward-looking data points to a cooling in pay growth, with increases levelling off as we move into the second quarter of 2026.
A softening labour market
The latest findings come as the UK economic outlook remains subdued, with expectations pointing to modest growth and a gradually loosening labour market.
Recent forecasts from the Office for Budget Responsibility (OBR) suggest GDP growth will remain relatively weak in 2026 before improving slightly in 2027, reinforcing a cautious environment for pay decisions. Vacancy levels have also levelled off and remain below recent highs, meaning more people are competing for fewer roles, with younger workers particularly affected. These trends point to a more constrained environment for pay growth over the coming year.
Sheila Attwood, Senior Content Manager, Data and HR Insights at Brightmine, comments: “What we're seeing is employers becoming more deliberate in how they set pay. Rather than reacting to short-term movements, many are anchoring decisions to what they believe is sustainable over the year ahead, particularly given ongoing cost pressures and an easing labour market.
"That more measured approach is translating into tight pay parameters, with affordability constraints continuing to limit the scope for higher awards."
Pay award forecasts for the 2026 calendar year
Looking towards the rest of 2026, pay forecasting suggests that 93.7% of employers still intend to award pay rises rather than implement freezes, although the proportion expecting a pay freeze has increased slightly compared with the previous year.
The median pay award forecast for 2026 is 3%, unchanged from the median settlement recorded across 2025. Meaning that despite a slightly stronger start to 2026, forecasts expect pay awards to decline through the course of the year, returning to the level seen in 2025.
Attwood adds: “The continued 3% forecast points to employers prioritising stability in their pay planning. While early settlements this year have been marginally higher, the wider outlook indicates that pay awards may settle back as organisations respond to slower economic growth and ongoing cost pressures.”
Pay forecasts for 2026 highlights
The Brightmine 2026 pay forecast findings are based on responses from 141 employee groups – covering just over 300,000 employees. Our findings are as follows:
- The median pay award forecast for 2026 is 3%, the same as the median award made during 2025.
- Overall, there is little variation in the pay award forecasts, with the middle half falling between 3% and 3.9%. The minimum award expected is a pay freeze, and the maximum a 10% uplift.
- For the second year in a row, organisations are heavily favouring a pay award at exactly 3% - the prediction given in almost four in 10 (38.3%) cases.
- Overall, two-thirds (65.2%) of pay awards are expected to be worth between 3% and 4%.
- Less than one pay award in 10 (7.7%) is expected to be worth 5% or more.
Brightmine February Pay Trends 2026 Highlights
Brightmine analysis covers 69 pay awards implemented between 1 December 2025 and 28 February 2026, representing pay settlements for 184,204 UK employees. Headline findings are as follows:
- Median pay awards level off. The median basic pay award for the three months to end-February stands at 3.3%, unchanged on the revised figure for the previous rolling quarter.
- Pay deals cluster in a narrow mid-range. Nearly six in 10 settlements (59.4%) fall between 3% and 4%, with 3% the most common award (with 20.3% of all settlements at this level). Pay freezes remain uncommon at 5.8% of all awards, and only a small minority of awards exceed 5% (just 8.6%).
- Mixed outcomes compared with 2025. Matched comparisons show a broadly balanced picture: 41.1% of organisations awarded higher settlements than last year, 35.6% awarded lower increases and 23.3% repeated the same award.
