PAY deals at engineering firms are at their lowest levels for 18 years, figures showed yesterday.

Average settlements for the three months to the end of June slipped to two per cent, compared with 2.1 per cent in the quarter to May.

The number of pay freezes also rose slightly, to just under one in four of all agreed settlements, the Engineering Employers Federation (EEF) said.

The drop matches a fall two months ago and comes despite the inclusion of April, the second most important month for wage negotiations.

Mark Yeandle, the EEF's deputy director of employment policy, said interest rates should be left on hold for the "foreseeable future".

Of the 410 settlements agreed during the period, 53 came in exactly at two per cent and just seven were agreed at five per cent or above.

The EEF said deferred pay settlements edged up to 12 per cent, compared with ten per cent in the three months to the end of May.