UK minimum wage seen rising almost 4% from 2027, Times reports

what happened

Finance minister John Healey is set to announce on Wednesday a rise in the minimum wage of nearly 4%, the Times reported. The National Living Wage for workers aged 21 and over is expected to climb to about £13.20 ($17.63) an hour from £12.71, a 3.9% increase, according to the paper, which did not name its sources. The finance ministry declined to comment.

The National Minimum Wage for 18- to 20-year-olds would rise to roughly £11.27 an hour from £10.85, the newspaper said. If confirmed in the budget, the increases would take effect in 2027 and reverse recent trends in which the youth rate grew faster than the adult rate. Britain's minimum wage is already among the highest in advanced economies relative to median earnings.

why it matters

Analysts and employers have linked the youth rate to rising youth unemployment. In April, the Low Pay Commission said the living wage would probably need to rise about 3.7% to £13.18 an hour in 2027. In March, the government widened the commission's remit to consider labour market conditions for 18- to 20-year-olds. For markets, higher employer costs could feed into services inflation and sterling sentiment.

market impact

GBP and UK gilts: higher employer wage costs may lift inflation expectations and pressure company margins

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