Bank of England surveys show firms expect pay to rise about 3.5% in 2027, days before a widely expected hike to 4%
The bank’s regional agents see little sign of the energy shock feeding into wages, as markets look for its first rate move of the year on Thursday.
The Bank of England released a survey on Friday showing that companies expect pay to rise by 3.5% next year2.
The bank’s Decision Maker Panel survey of businesses in the three months to October said firms expected wage growth of 3.4% over the coming year3. Taken together, the bank’s surveys show firms see pay rising around 3.5% in 20273.
Separately, the bank’s network of regional agents said pay settlements so far this year are running at 3.6%, and that firms expect similar growth in 20271. The agents see little sign of the energy shock feeding into pay1.
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Why it matters to investors
The figures arrive days before a policy decision. The Bank of England is widely expected to raise the base rate from 3.75% to 4% on Thursday4. That would be the bank’s first interest rate move of the year4,6.
Wage growth is a central input for that decision, because it shows whether higher energy costs are passing through into pay settlements1. The agents’ finding that there is little sign of that pass-through so far is the main message of the surveys1.
The pay data point to stability rather than acceleration: settlements running at 3.6% this year, and expectations of around 3.5% for 20271,3. The Decision Maker Panel figure of 3.4% sits just below both3.
For households, a move to 4% carries a direct cost. One estimate warns of a £4,000 mortgage shock as rates are tipped to rise next week4.
The decision is part of a crowded week. Interest-rate decisions are also due from Sweden’s Riksbank, Australia’s RBA and central banks in Norway, the Czech Republic, Malaysia, Brazil and Mexico5,7. The same week brings the US midterm elections and US jobs data7.
What to watch
The first marker is Thursday’s decision and whether the bank raises the base rate from 3.75% to 4%, as widely expected4,5.
A second is how the bank weighs the survey evidence that firms expect pay growth of around 3.5% in 2027 against the energy shock1,3.
A third is whether the other central banks deciding in the same week move in the same direction7.
Sources
- BOE Agents See Little Sign of Energy Shock Feeding Into Pay - Bloomberg, bloomberg.com (2026-10-30)
- Bank of England expects 3.5% pay rise | Business Post, businesspost.ie (2026-10-30)
- Bank of England surveys show firms see pay rising around 3.5% in 2027 | Financial News, lse.co.uk (2026-10-30)
- Millions warned of £4,000 mortgage shock as interest rates tipped to hit 4% next week, gbnews.com (2026-10-30)
- Week Ahead for FX, Bonds: U.S. Midterms, Jobs Data in Focus; BOE Expected to Raise Rates - WSJ, wsj.com (2026-10-30)
- What’s next for UK rates? Economic week ahead – 2-6 Nov - Investors’ Chronicle, investorschronicle.co.uk (2026-10-30)
- Week Ahead for FX, Bonds: U.S. Midterms, Jobs Data in Focus; BOE Expected to Raise Rates, wsj.com (2026-10-30)
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