Continued wage growth could stall rate relief for borrowers
Starting salaries in the UK grew at their sharpest rate since mid-2022 last month, adding complexity to the Bank of England’s decision-making on interest rates.
According to new data from job search platform Adzuna, the average advertised salary reached £42,278 in April, marking an annual increase of nearly 9%. Compared with March, advertised pay rose by 0.75%. This marks the fastest year-on-year wage growth since June 2022.
Northern Ireland led the regional salary increases with a 12.4% annual rise, followed by Scotland, where average advertised wages were up by more than 11%. London also saw a notable jump, with a year-on-year increase of 8.4%, bringing the average listed salary in the capital to £48,635.
The figures come amid ongoing scrutiny from the Bank of England, which has aimed to slow wage growth as part of efforts to bring inflation under control. However, the continued rise in pay may signal that wage pressures remain embedded in the labour market, potentially influencing the central bank’s future rate decisions.
Starting salaries rose at their quickest pace in nearly three years last month, underscoring the Bank of England’s tricky path towards further interest rate cutshttps://t.co/jrKwLyepo6 pic.twitter.com/wIjxPVbeuN
— Times Business (@TimesBusiness) May 27, 2025
At its meeting earlier this month, the bank’s Monetary Policy Committee narrowly voted 5-4 to cut interest rates by 0.25 percentage points to 4.25%. While some members supported the reduction, others cited strong wage growth as a reason to delay. Chief economist Huw Pill, who voted against the cut, later suggested that rate reductions may have been premature.
Fresh economic indicators may also prompt a more measured approach to rate adjustments in the coming months. Inflation rose to 3.5% in April, according to the Office for National Statistics, up from 2.6% in March. Meanwhile, retail sales climbed 1.2% month-on-month.
Adzuna reported that job openings totalled 862,876 in April, up just over 1% compared with the same period last year but down nearly 1% from March.
“After signs of recovery in March, April brought a reminder that this remains a delicate job market. Vacancies dipped and salary growth, while still strong on an annual basis, is starting to show signs of slowing,” said Andrew Hunter, Adzuna’s co-founder.
The healthcare sector posted its highest level of job openings since January 2024, a potential indicator of upcoming workforce shortages, especially after the government’s decision to phase out overseas recruitment of care workers. In contrast, the construction and trade sectors experienced the steepest decline, with job ads down 15.2%.
Demand remained strong in several areas, including hospitality and catering, logistics and warehousing, education, and retail.
Adzuna’s findings align with recent ONS labour market estimates. The agency said UK job vacancies declined to 761,000 in the three months to April, well below the post-pandemic peak of 1.3 million. Average wage growth across all employees also eased, falling to 5.6% in Q1 2025 from 5.9% in the prior quarter.
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