Business

Real Pay Squeeze: UK Private Sector Wages Fall Behind Inflation in 2026

Published

3 weeks ago

21 May 2026

Real Pay Squeeze: UK Private Sector Wages Fall Behind Inflation in 2026

Britain’s private sector workforce is staring down its sharpest squeeze on real take-home pay since the cost-of-living crisis of 2022, as a fresh burst of oil-driven inflation outpaces a visibly slowing rate of earnings growth.

Figures released by the Office for National Statistics this week show that average weekly earnings excluding bonuses rose by 3.4 per cent in the three months to March, exactly matching the average rate of inflation over the quarter. Including bonuses, the figure climbed to 4.1 per cent, although that headline number was almost certainly flattered by outsized payouts in the City’s financial services sector.

For the rank-and-file employee outside the public payroll, the picture looks considerably bleaker. Real incomes are on course to flatline through 2026, with the surge in global crude prices expected to drag annual CPI back up towards 4 per cent in the coming months. With unemployment now at 5 per cent and youth joblessness at an 11-year high, the bargaining power that working households briefly enjoyed during the post-pandemic labour shortage has all but evaporated.

“There is potential for a sharp squeeze in real wage growth in 2026,” said Peter Dixon, senior economist at the National Institute of Economic and Social Research.

A broad-based slowdown

Wage growth has weakened across nearly every sector of the economy, with construction wages actually contracting outright by 0.6 per cent between January and March. Builders have been hit on three sides at once, energy, transport and raw materials, since the US-Iran conflict triggered a fresh spike in oil and shipping costs.

Private sector earnings growth has slipped to 3 per cent, the slowest pace since the pandemic. Analysts at ING calculate that the rolling three-month measure of private sector pay grew by just 0.6 per cent, its weakest reading in more than a decade.

The contrast with Whitehall is stark. Public sector pay rose by 4.8 per cent over the same period, buoyed by the increase in the national living wage and by generous settlements recommended by the independent pay review bodies under the Labour government. The growing divide has reignited a long-running political row with employers warning that the gap is becoming politically and economically untenable.

A new period of falling real wages

The Resolution Foundation is unambiguous about what the figures mean for household finances. The think-tank’s latest analysis warns that Britain is on the brink of its fourth period of falling real wages in less than two decades, a record unmatched by any other advanced G7 economy.

“The UK is on the cusp of its fourth period of falling real-wage growth in less than two decades,” said Julia Diniz, economist at the Resolution Foundation. “This stuttering performance goes a long way in explaining the political and economic discontent that surrounds modern Britain.”

For lower-income households, that discontent is more than rhetorical. Edward Allenby, senior economist at Oxford Economics, warned that the inflation about to hit family budgets will be concentrated in the categories that bite hardest at the bottom of the income distribution.

“Higher inflation will likely be concentrated in essential categories, food, energy, petrol, that comprise much larger shares of lower-income household spending,” Allenby said. “These households also appear to be entering the latest energy shock in a more vulnerable financial position than the last one.”

The Bank’s dilemma

The Bank of England is now caught in an uncomfortable bind. Threadneedle Street has kept Bank Rate pegged at 3.75 per cent since the Middle East conflict broke out, but the Monetary Policy Committee has already signalled that it may have to resume tightening to head off so-called “second-round effects”, the risk that companies pass higher energy costs through to prices, and workers in turn demand inflation-busting settlements.

The wage figures suggest the second of those channels is closed for the moment. The Bank has previously indicated that it needs average earnings growth in the region of 2 to 3 per cent to hit its 2 per cent inflation target, a benchmark the latest data are converging on rapidly. The prospect of rate rises in the middle of an energy-driven inflation spike risks compounding the squeeze on households already feeling the pinch.

“A soft labour market could limit arguments that there will be notable second-round effects from the current energy shock,” said Josie Anderson, economist at Nomura.

Markets had been pricing in close to three quarter-point increases this year, taking the base rate back to 4.5 per cent, before Tuesday morning’s labour market release. That bet now looks aggressive. Andrew Wishart, economist at Berenberg, said the MPC would be “wary of pushing the labour market over a tipping point that triggers recessionary dynamics”.

“The market still prices three hikes today but the labour market is too weak to bear them,” Wishart added. “Even if energy prices remain high, we suspect that the Bank will deliver one quarter-point hike at most.”

Market reaction

Investors agreed. Yields on two-year gilts, which track expectations of the Bank Rate over the policy horizon, fell by 0.02 percentage points on the repricing, bond yields move inversely to prices. Sterling weakened against the dollar and the euro as traders trimmed their bets on UK interest rates.

For Britain’s small and medium-sized businesses, the takeaway is mixed. A pause in the Bank’s tightening cycle would offer welcome relief on borrowing costs at a moment when many SMEs are still digesting the rise in employer National Insurance contributions and the higher national living wage. But the wider story, flat real incomes, rising unemployment and cooling consumer demand, points to a more difficult trading environment through the second half of 2026, particularly for businesses with discretionary, consumer-facing revenue streams.

Whether the squeeze ultimately delivers the political backlash that the Resolution Foundation’s analysis implies remains to be seen. What is no longer in doubt is that, for the fourth time in less than 20 years, the average British worker is becoming poorer in real terms, and SME owners hoping for a confident consumer to spend their way through the next 12 months should plan accordingly.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.

Business

Bank stocks rally as RBI steps lift mood, trigger short covering

Published

3 minutes ago

10 June 2026

NewsAdmin

Bank stocks rally as RBI steps lift mood, trigger short covering

Bank stocks gained as much as 5% on Tuesday after the raft of measures introduced by RBI to help hedge foreign currency borrowings stoked investor optimism and led to traders covering some of their bearish bets.

Bank Nifty rose 2.1% to 55,194.50; and closed above 55,000 levels after two weeks while benchmark Nifty moved 0.5% higher on Tuesday. All 14 constituents of Bank Nifty moved higher on Tuesday. .

Bank of Baroda jumped 5.5% while Canara Bank climbed 4.5%. Punjab National Bank and Federal Bank advanced around 3.5%.

“The measures by RBI are likely to drive a healthy deposit base for banks and lead to cheaper cost of funds since the hedging cost on FCNRB is borne by the Central Bank while the hedging costs on ECB’s is subsidised,” said Dharmesh Kant, head of research, Cholamandalam Securities.

Bank stocks rally as RBI steps lift mood, trigger short covering<br>

Last week, the RBI announced measures to boost foreign currency inflows and to support the rupee. The Central Bank offered concessional dollar-rupee swap facility to absorb the entire forex hedging costs for three-to-five-year Foreign Currency Non-Resident (FCNR[B]) deposits until October 16, 2026. In addition, it offered a concessional swap facility for eligible External Commercial Borrowings (ECBs) raised by public sector entities, fixing the hedging cost at 1.5% per annum.

This policy allows Indian banks to access low-cost global capital and alleviate domestic deposit crunches without bearing currency risk, said analysts. “The sudden fundamental clarity triggered massive technical short covering, catching derivative traders by surprise and sparking a rapid short squeeze since the Put-Call Ratio (PCR) had dropped into an oversold zone below 0.80 ahead of the news,” said Nishchal Jain, Quant Researcher, Share. Market by Phone Pe.
The high-volume breakout past 55,100 and decisive price action, shifts the market regime from “sell on rallies” to “buy on dips”, establishing 55,000 as a strong psychological support base- forming a high-conviction bullish view, he said.

Business

IGO shares slide after fire at processing plant

Published

11 minutes ago

10 June 2026

NewsAdmin

IGO shares slide after fire at processing plant

IGO says spodumene production remains on track after reporting that a fire broke out at its new chemical-grade processing plant at the Greenbushes lithium operation.

Shares in the critical minerals miner slid in morning trade after reporting a fire had occurred at its $880 million Chemical Grade Plant 3 (CGP3) plant at the Greenbushes mine site yesterday.

IGO said the fire was extinguished and no injuries were sustained, and that its first and second chemical crushing and processing plants on site were unaffected by the blaze.

The third chemical plant at the hard-rock lithium operation in the state’s South West falls under the ownership of Talison Lithium, in which IGO owns an indirect 25 per cent stake, alongside China’s Tianqi Lithium (26 per cent) and US major Albemarle Corporation (49 per cent).

CGP3 is the third chemical grade plant built at the Greenbushes operation, which is still ramping up after processing first ore in December last year.

It has a processing capacity of 2.4 million tonnes per annum to produce up to 500,000 tonnes per annum of lithium mineral concentrate.

The market was told Talison Lithium had commenced a full investigation into the cause and damage from the incident on Tuesday.

IGO said Greenbushes production remained on track to meet its FY26 guidance of between 1,375 million and 1,425 million tonnes of spodumene concentrate.

The fire at the new plant represents another setback for the critical minerals miner, which has been grappling with challenges at its co-owned Kwinana lithium hydroxide plant.

That downstream processing plant is operating at about 50 per cent nameplate capacity, which was an improvement when reported in the March quarter.

IGO and joint venture partner in the plant, Tianqi Lithium, have been increasingly at odds over the future of the plant, after the ASX-listed miner wrote down its value to zero.

Shares in IGO are trading down 6 per cent to $8.48 apiece at 11AM AWST.

Business

Prop traders seek relief on margin funding as global rivals up game

Published

17 minutes ago

10 June 2026

NewsAdmin

Prop traders seek relief on margin funding as global rivals up game

Domestic proprietary stock traders are set to seek regulatory intervention to lobby the central bank to rework the margin funding rules for their trades as the existing proposal puts them at a disadvantage over global traders that are stepping on the gas in India, people familiar with the matter said.

The Commodity and Capital Market Participants Association of India (CPAI) is working with the Industry Standards Forum (ISF), a body comprising members of various industry associations, to create a separate framework that would distinguish between liquidity providers and speculators. That they believe would help them to convince the Reserve Bank of India (RBI) to permit lower margin for the bank guarantees and enable them to trade higher volumes.

The RBI has mandated that banks lending to capital market intermediaries (CMIs) extend guarantees for proprietary trading subject to the facility being fully secured. The proposal says that banks can extend guarantee only to the amount equal to the value of the collateral provided by the proprietary trading firm.

Business

SailPoint: Weaker Net-New ARR Amid Lofty Valuation (Rating Downgrade)

Published

24 minutes ago

10 June 2026

NewsAdmin

SailPoint: Weaker Net-New ARR Amid Lofty Valuation (Rating Downgrade)

Business

Trump administration urges judge to reject bid to block White House UFC event

Published

30 minutes ago

10 June 2026

NewsAdmin

Trump administration urges judge to reject bid to block White House UFC event

The ASEAN Future Forum 2026 opened in Hanoi on June 9, themed “Shaping Our Future Together.” Launched by Vietnam in 2023, the forum unites ASEAN leaders, businesses, and academics to address regional challenges including AI, energy security, and strategic autonomy, advancing ASEAN Community Vision 2045.

Key Points

• The ASEAN Future Forum (AFF) 2026 opened in Hanoi on June 9 under the theme “Shaping Our Future Together: Peace, Prosperity and People-Centered,” attended by Vietnam’s Prime Minister Le Minh Hung and leaders from Laos, Cambodia, Thailand, and Timor-Leste, along with the ASEAN Secretary-General.

• Launched by Vietnam at the 2023 ASEAN Summit, the AFF has grown into a key strategic dialogue platform, with ideas from previous editions reflected in official ASEAN Summit documents, reinforcing Vietnam’s proactive role in advancing regional cooperation.

• AFF 2026 features broader participation than previous editions, including political parties, local authorities, and business and academic communities, with discussions covering AI, energy security, conflict prevention, and implementation of the ASEAN Community Vision 2045.

The ASEAN Future Forum 2026: Launch and Leadership

The ASEAN Future Forum (AFF) 2026 officially opened in Hanoi on June 9, under the theme “Shaping Our Future Together: Peace, Prosperity and People-Centered.” The event was attended by senior regional leaders, including the Prime Ministers of Vietnam, Laos, Cambodia, Thailand, and Timor-Leste, alongside Vietnam’s Foreign Minister and the ASEAN Secretary-General. First introduced by Vietnam at the 43rd ASEAN Summit in 2023, the AFF was designed as a multi-stakeholder platform to complement existing ASEAN mechanisms and support long-term policy thinking for the ASEAN Community.

Vietnam’s Vision: Dialogue, Inclusion, and Regional Resilience

In his opening remarks, Foreign Minister Le Hoai Trung emphasized Vietnam’s commitment to creating an open, forward-looking space for dialogue among ASEAN members and international partners. The forum brings together policymakers, academics, businesses, and citizens to contribute ideas toward a stronger, more resilient ASEAN. Previous editions in 2024 and 2025 generated innovative yet practical proposals, many of which have been reflected in official ASEAN Summit documents. Vietnam hopes the forum will strengthen diplomacy and mutual understanding amid growing geopolitical tensions and strategic competition across the region.

AFF 2026: Expanding Scope and Shaping the Future Agenda

AFF 2026 features a broader and more inclusive format than previous editions, with discussions covering critical issues such as unity, strategic autonomy, conflict prevention, energy security, artificial intelligence, and financial technology. For the first time, the forum will host meetings involving political parties, local authorities, and business and academic representatives from across Southeast Asia. These expanded dialogues are expected to generate fresh perspectives and actionable solutions to support the ASEAN Community Vision 2045, helping the bloc adapt effectively to both emerging regional challenges and shifting global dynamics.

Source : ASEAN Future Forum 2026 opens in Hanoi