Britain’s minimum wage is expected to rise again next year, potentially reaching £13.18 an hour in 2027, as policymakers attempt to keep pace with rising average earnings and ongoing

economic uncertainty.

The forecast comes from the Low Pay Commission, the independent body that advises the UK government on minimum wage levels. The projection was published on Wednesday as part of its annual consultation process with businesses, trade unions, and the public.

Steady increases continue

The new estimate follows a 4.1% increase that took effect in April 2026, lifting the National Living Wage to £12.71 per hour for workers aged 21 and over. If projections hold, next year’s rise of around 3.7% would continue the trend of steady increases in recent years.

The commission noted that the 2027 rate could ultimately fall anywhere between £13.02 and £13.34, depending on how overall earnings growth evolves across the economy.

Minimum wage growth since 2020

The UK’s minimum wage has grown significantly over the past five years. Since April 2020, it has increased by roughly 50%, making it one of the highest among advanced economies when measured as a share of median earnings.

This reflects a long-term government policy—followed by successive administrations—to raise the minimum wage to around two-thirds of typical earnings, a benchmark seen as balancing worker protection with business sustainability.

Impact on workers and businesses

Today, around 6% of UK workers aged 21 and over earn the minimum wage or close to it. Among younger workers, however, that figure rises sharply to about 20%.

The wage increases have been particularly steep for workers aged 18 to 20. Some economists and business groups argue this has contributed to rising youth unemployment, which reached a 10-year high at the end of 2025.

However, the Low Pay Commission disputes this link. Its analysis suggests that employment declines among young people have been more pronounced in regions where wages were already above the legal minimum, such as parts of London.

Inflation concerns and economic uncertainty

The Bank of England is closely monitoring wage growth, as pay increases above roughly 3% are sometimes viewed as potentially inflationary.

Still, the commission emphasized that minimum wage workers make up a relatively small share of the total wage bill, limiting the broader inflationary impact.

Philippa Stroud, chair of the commission, stressed the importance of gathering evidence during uncertain economic times:

 “The current economic uncertainty makes it essential that the Commission hears from those affected and builds consensus for evidence-based recommendations.”

What’s next for UK wage policy?

The UK government, led by the Labour Party, has pledged to eventually eliminate lower minimum wage rates for younger workers, describing them as “discriminatory.”

However, in its latest directive, the government has granted the Low Pay Commission full flexibility in setting future rates—suggesting that changes could depend heavily on economic conditions rather than strict political targets.

Why the minimum wage matters

The minimum wage plays a crucial role in protecting low-income workers, reducing inequality, and supporting household spending. At the same time, policymakers must balance these benefits against risks to employment and inflation.

With wage growth slowing but still uncertain, the coming year will be critical in determining whether the UK can continue raising pay without putting additional strain on businesses or the wider economy.