Editor's Note: Pay and the economy: a state of ambiguity

Our main feature 'What is the industrial outlook for 2025?' explores the economic landscape for 2025 in more detail. Beneath the more positive headlines we can see the pressures that will have an impact on pay growth.

Economic growth is expected to be slow in 2025, with real GDP predicted to increase by just 0.7%. When it comes to jobs, a deteriorating picture shows the labour market “loosening” which means higher unemployment and fewer vacancies compared to job-seekers. This will likely reduce the market power for workers to demand higher wages and means more people have to deal with the impact of periods of unemployment.

With RPI inflation expected to average 3.5% in 2025, according to the Office for Budget Responsibility (OBR), the positive news on pay growth may be short-lived. In the feature's survey of our workplace rep contacts, the implications of high cost of living remains at the heart of their negotiations.