UK wage rise: Minimum pay raised for 2.7 million workers from April; businesses warn of higher cost pressures
Millions of low-paid workers in the UK will receive a pay increase from April as the government confirmed new minimum wage rates ahead of Wednesday’s Budget. The hourly rate for over-21s will rise by 50p to £12.71, with 18–20-year-olds seeing an 85p jump to £10.85, and under-18s and apprentices receiving £8 an hour after a 45p increase. Chancellor Rachel Reeves said 2.7 million people will benefit from the changes.The rise follows last year’s 6.7% increase for over-21s and 16.3% for 18–20-year-olds, when employers also faced higher National Insurance contributions, reported BBC. Reeves said the cost of living remained the biggest issue for working people and that “the economy isn’t working well enough for those on the lowest incomes”. She added that the increases ensured workers were “properly rewarded” for their labour, a point also emphasised by the government in, as per The Guardian.However, businesses warned of pressure on hiring and prices. UK Hospitality chair Kate Nicholls said firms had “reached their limit of absorbing seemingly endless additional costs” and would have to pass them on to consumers, fuelling inflation. The British Chambers of Commerce said every above-inflation rise added to business strain, with deputy public policy director Jane Gratton noting, ‘There’s a limit to how much additional cost employers can bear without something having to give’, as per BBC.The Treasury said the new minimum wage rates for 2026 struck a balance among worker needs, business affordability and employment opportunities. However, steep pay rises could hinder job prospects for young people. The Resolution Foundation warned the increase for 18–20-year-olds was “unnecessarily big” and risked pushing up NEET (not in education, employment or training) rates.Still, the Low Pay Commission maintained previous rises “have not had a significant negative impact on jobs,” as per BBC. Commission chair Philippa Stroud said the body had weighed cost-of-living pressures against employer challenges and observed that “no one is having an easy time”.The government also confirmed additional measures, including extending the sugar tax to milk-based drinks, expanding the Help to Save scheme and giving English regional mayors powers to impose a tourist tax.
