UK businesses trim hiring and pay plans, Lloyds says

British businesses trimmed their plans for staffing and wage increases this month, according to a survey published on Wednesday that suggested April’s big increase in the minimum wage is weighing on employers.

With the Bank of England watching for signs that inflation pressures are abating enough for it to cut interest rates, the Lloyds Bank Business Barometer’s measure of staffing plans – or the gap between firms planning to hire and those planning cuts – fell to 27 per cent from February’s almost two-year high of 36 per cent. The series’ long-term average is 22 per cent.

The share of firms expecting to increase wages by 3 per cent or more over the next 12 months fell slightly to 33 per cent from 35 per cent.

“It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses – especially smaller firms,” Hann-Ju Ho, a senior economist at Lloyds Bank Commercial Banking, said.

Britain’s minimum wage will rise by nearly 10 per cent next month, and supermarkets and other retailers that pay staff only slightly more have raised pay ahead of the increase.

The BoE, which last week kept interest rates on hold, has said wage growth remains high despite signs of a slowdown

The Lloyds survey showed overall business confidence held at a net 42 per cent.

Separately, the Resolution Foundation think tank said Britain’s introduction of the minimum wage 25 years ago meant the pay of low earners was 6,000 pounds ($7,600) higher than it would have been had it risen in line with typical pay growth.

“The introduction of the minimum wage 25 years ago is the single most successful economic policy in a generation,” Nye Cominetti, principal economist at the think tank, said.

The share of workers on low pay – defined as an hourly wage less than two thirds of the median – fell from 22 per cent in 1999 to 9 per cent in 2023, he said.

Relative to typical wages, Britain’s minimum wage is now one of the highest among advanced economies – similar to that in France and South Korea.

($1 = 0.7904 pounds)