After a 12-month squeeze, British workers are finally getting a pay raise

Another day at the office.
Another day at the office.
Image: Reuters/Ben Gurr/Pool
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After 12 months, Brits are finally getting a pay raise. For the first time since January 2017, real wage growth—that is, pay adjusted for inflation—turned positive in February (the latest data available), rising by a modest 0.2% from a year earlier.

While nominal wage growth was the same as the previous month, at 2.8%, inflation-adjusted pay got a bump from the slowdown in price growth. Inflation rose sharply last year as a result of a slump in the British pound after the Brexit referendum, but that effect is starting to fade. As divorce negotiations between the UK and EU continue, with a recently agreed transition deal effectively extending the time the UK is in the EU (in all but name), traders have boosted the pound. It’s now tantalizingly close to the levels recorded before the momentous vote to leave the EU in June 2016.

Tomorrow, new inflation data will be watched closely to see if these real wage gains are likely to continue, and if the Bank of England can justify the interest-rate hike it’s expected to deliver next month.