Pay rises to stay below inflation

Workers in the UK will receive another below-inflation pay rise next year, with firms budgeting for a 3 per cent increase, according to Mercer.

The consultants said that companies were being cautious about fixed costs such as salaries because of the continuing "volatile" state of the economy amid fears that growth could fall again.

The research suggested that pay rises will be bigger in finance, banking and energy companies.

According to Mercer, pay rises are likely to average 2.7 per cent in Western Europe next year. Workers in Norway are set to receive the biggest pay rise, of 3.1 per cent, falling to just over 2 per cent in Portugal and Ireland.