Salary increase budgets for 2026

UK salary increase budgets for 2026 are set at 3.6%, mirroring the actual pay rises seen in 2025, according to recent research by Willis Towers Watson.

The survey, which included 1,264 UK organisations, highlighted that this year’s projections are lower than the planned increases of previous years – 3.9% in 2025, 4.3% in 2024, and 5.3% in 2023.

Key findings:
– 51% have kept their pay budgets the same.
– 10% plan to increase pay budgets.
– 27% will decrease pay budgets.

Influencers of these budget changes include inflationary pressures, financial expectations, a tight labour market, and compensation strategy adjustments.

To boost staff retention, UK employers are:
– Increasing training opportunities (52%).
– Improving employee experience (51%).
– Enhancing health and wellness benefits (39%).
– Boosting workplace flexibility (34%).
– Modifying compensation programmes (28%).

It’s clear the approach to salary budgeting in 2026 is more strategic. Organisations need to use their budgets effectively, focusing on employee experience and satisfaction to drive productivity.