UK wage growth to be 'among lowest' in Europe next year

Wages in the UK will see one of the lowest increases in Europe next year as a result of rising inflation, a report says.

Real wages are forecast to rise just 0.3% in 2017, considerably lower than the 1.9% increase seen in 2016, human resources consultant ECA International said.

That is expected to be the third-lowest rate of wage growth in Europe.

By contrast, wages in Russia are predicted to rise by 3% next year.

Across Europe as a whole, real wages are forecast to rise by 1.3% on average, down from the 1.8% growth seen in 2016.

The UK has avoided recession following the EU referendum in June largely as a result of consumer spending propping up the economy.

Data released by the Office for National Statistics on 27 October showed that the economy expanded 0.5% between July and September, beating analyst expectations for 0.3% growth.

However, consumers' pockets are expected to take a hit as the weak pound pushes inflation up to around 2.5% next year.

Mark Harrison, remuneration services manager at ECA International, said: "The sharp fall in the value of the pound since the UK's Brexit referendum is expected to contribute towards higher living costs in the UK which will see real wage increases fall to just 0.3% next year, compared to the 1.9% wage increases seen in 2016.

"Inflation is expected to hit 2.5% over the next 12 months in the UK."

To compile the report, ECA International collected responses from 260 multinational companies across 72 countries.

A separate survey published by IHS Markit and the Recruitment and Employment Confederation on 8 November showed that UK businesses hired permanent staff at the fastest pace in eight months in October.

The survey also revealed that overall demand for both permanent and temporary staff was at the highest level since before the EU referendum.