By Clare Moore, Brightmine Communications Manager
Pay rises to remain at stagnant at 3% into 2026
The latest data from HR data and insights provider Brightmine shows that UK pay rises have plateaued at 3% this quarter, with its 2026 Pay Forecast research predicting they will hold steady at this level over the next 12 months.
This marks a return to pre-inflation levels after two years of historically high settlements. While most organisations will continue to award pay increases when reviewing pay levels in the year ahead, few anticipate matching inflation, as affordability and business performance rise to the top of decision-making criteria.
This means the vast majority of organisations expect to make pay awards at or below the value of last year’s increase – with 45% forecasting awards at the same level, 32% predicting lower awards, and only 23% expecting higher ones.
Affordability the defining factor for 2026 pay decisions
After several years of inflation-led pay growth, the balance of factors affecting pay budgets has shifted. Organisations now cite affordability and employer national insurance contributions as the key downward pressures on pay awards, outweighing upward drivers such as industry pay levels and cost of living concerns.
While inflation remains a reference point for many businesses, 69% will use the Consumer Prices Index (CPI) as their main measure when setting pay levels, rather than the Retail Prices Index (RPI).
Outlook for 2026: Stability, not stagnation
Despite economic uncertainty, organisations are not signalling a return to widespread pay freezes. Most plan to maintain pay review cycles, with an increased focus on alternative reward mechanisms such as performance recognition, benefits enhancements, and skills-based hiring.
“After two years of record-breaking pay awards driven by inflation, 2025 has seen a clear reset. Employers are now operating in a more balanced environment, where affordability and performance are shaping pay budgets far more than headline inflation figures.
The next year will test organisations’ ability to remain competitive while managing tight budgets. We’re seeing a growing focus on benefits, recognition and skills-based pay as employers look for new ways to attract and retain talent without overextending financially.”
– Sheila Atwood, Senior Content Manager, Data and HR Insights, Brightmine
Pay forecasts for 2025/2026 highlights
Brightmine 2025/2026 forecast findings are based on responses from 213 organisations representing over 600,000 employees, alongside data from Brightmine Compensation Planning.
Key findings reveal the following:
- Organisations are forecasting a median 3% pay award over the next 12 months. This is identical to the median pay awards recorded by Brightmine for the 12 months to the end of August 2025.
- Expected pay awards are bunched reasonably closely around the median, especially compared to the past year. The middle half of pay awards are expected to sit between 2.5% and 3.5% (a slightly narrower interquartile range of pay awards compared to that recorded between September 2024 and August 2025).
- Around one-third (36.8%) of pay awards are forecast to result in a 3% increase, making this the most common outcome likely and matching the most common pay award in the previous 12 months.
- Only a handful of employee groups (4.2%) could see their pay frozen at their next pay review. This is around the same as the proportion of pay freezes over the past year (4.1%).
- The number of pay reviews at higher levels is expected to continue to remain low, with just one in 10 expected to be worth 5% or more (around the same as over the past year).
- All three broad sectors examined – private-sector services, manufacturing and production, and not-for-profit – are expecting pay awards to centre on a 3% increase.
Brightmine October 2025 pay trends highlights
Brightmine’s October analysis draws on 34 pay awards implemented between 1 July and 30 September 2025, together affecting almost 54,000 UK employees. Headline findings are as follows:
- Pay growth plateaus. The median basic pay award stood at 3% in the three months to end-September, extending the consistent pattern seen throughout 2025.
- Most common pay award slips below 3%. More than one-third (34.5%) of settlements awarded increases between 2% and 2.99%, slightly overtaking 3% as the most common pay award range (31%) this rolling quarter.
- 2025 deals fall short of last year’s levels. A matched-sample analysis shows that nearly two-thirds of pay deals (61.3%) fell below 2024 outcomes, while only 16.1% awarded higher increases than last year.
Pay review pattern – whole economy, September 2024 to September 2025
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About the author
Clare Moore
Communications Manager, Brightmine
Clare has over 20 years’ experience supporting B2B organisations with their communications strategies.
Clare is CIPR qualified and holds a level 5 CIPD qualification in Human Resource Management.
Specialising in the business compliance space and a self-confessed HR nerd, Clare has worked with both professional services and technology companies to educate and inform professionals on the latest developments within HR, employment law and payroll.
Connect with Clare on LinkedIn
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