State pension on course for 4.7% rise under triple lock
UK pensioners can look forward to a 4.7% increase in their state pensions next year, if the government sticks with the triple-lock.
This morning’s labour market data shows that average wage growth (including bonuses) was 4.7% between May to July.
That is the figure used in the triple lock formula which dictates that the state pension will increase in line with average wages, inflation or 2.5% each year, whichever is higher.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, explains:
“State pensioners look on course to get an 4.7% uplift in their state pension next year as average wage growth remained robust. Such an increase would see a full new state pension rise from its current level of £230.25 per week to £241.05 per week from April. Those retiring on the basic state pension would see their weekly income increase from £176.45 per week to £184.75.
However, the hike is not yet set in stone. We are awaiting the final piece of the triple lock puzzle – September’s inflation data to be published next month and if this surpasses 4.7% then we could see an even bigger increase. However, given that inflation currently sits at 3.8% it seems likely that wage growth will be the key figure here.
Morrissey adds that the system creates some complexity for pensioners:
Those on the new state pension will receive the uplift but those on the basic state pension will only receive it on their main state pension. Any further top ups such as the state second pension are usually uprated in line with inflation instead, so they won’t get the full benefit of the triple lock on their entire payment.
Rachel Vahey, head of public policy at AJ Bell, points out that the state pensions will be close to the personal allowance of £12,570 – pensioners with additional income (such as a second pension) would then pay income tax on earnings over that limit.
Vahey says:
“Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee, with the latest ONS earnings growth figure coming in at 4.7% for the period between May and July of this year.
“Under the triple lock guarantee, the state pension will rise by the highest of average earnings growth in May to July, September’s inflation figure or 2.5%. Provided inflation doesn’t spike above 4.7% in September, all stars point to these latest earnings figures boosting the new state pension to £12,534.60 from April 2026 – putting it above £12,000 for the first time ever and perilously close to the frozen personal allowance.
The triple lock is a political pledge, not laid down in legislation, so pensions aren’t guaranteed to rise as outlined above. But in July, then work and pensions secretary Liz Kendall said the government was commited to the pensions triple lock “for the entirety of this Parliament”….
Updated at 03.28 EDT
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UK interest rate cut highly unlikely this week
Today’s labour market report is very unlikely to spur the Bank of England to cut interest rates this week.
Although basic wage growth (excluding bonuses) dipped to 4.8%, that is still uncomfortably high for the more hawkish policymakers at the BoE, especially with inflation heading towards 4%, twice its official target.
The money markets indicate there is a 97% chance that the Bank leaves interest rates on on hold at 4% at its next meeting on Thursday, with a rate cut to 3.75% now not fully priced in until April 2026.
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, says:
The vote is unlikely to be unanimous – the 9-person Monetary Policy Committee has been split for months, and perma-doves Swati Dhingra and Alan Taylor aren’t likely to be swayed, irrespective of the steady rise in consumer prices.
“In August the MPC flagged its discomfort regarding the near-term outlook for consumer prices, a view subsequently confirmed by stronger than expected price pressures in July. While dissenting MPC doves argue that rising inflation may prove transient, the upward trajectory of price pressures creates an uncomfortable backdrop for the majority to vote for a consecutive loosening.
ShareGrocery inflation slows to 4.9%
There is some relief in the UK’s cost of living squeeze this morning – grocery price inflation has slowed.
British grocery inflation fell to 4.9% over the four weeks to 7 September, data from Worldpanel by Numerator shows. That’s down from 5% the previous month, but means grocery prices are still rising a little faster than wages.
Fraser McKevitt, head of retail and consumer insight at Worldpanel, reports that more consumers are turning to supermarkets own label lines rather than branded goods (which are typically more expensive):
Supermarkets’ own lines now make up 51.2% of all sales, up from 50.9% a year ago.
Sales of these products grew by 5.9% this period, just ahead of brands at 5.3%, but it’s the premium own label goods which are the real standout performers.
Sales rose by an impressive 10.3% making it six months in a row that they’ve increased by double digits.
However, brands are holding ground in some categories, including toothbrushes, frozen chicken and baby toiletries, showing that consumers still value well-known names across some very different parts of the store.”
Worldpanel’s report also shows that Tesco’s sales have risen by 7.7% year-on-year in the last 12 weeks, followed by Sainsbury’s with 5.4%, Morrisons with 1.4% growth, and Asda whose sales fell by 2.7%, while Co-op grocery sales fell 2%.
Among discount chains, Lidl’s sales jumped by 11% while Aldi grew by 4.7%.
Online grocer Ocado’s sales jumped by 11.9% year-on-year.
ShareShareState pension on course for 4.7% rise under triple lock
UK pensioners can look forward to a 4.7% increase in their state pensions next year, if the government sticks with the triple-lock.
This morning’s labour market data shows that average wage growth (including bonuses) was 4.7% between May to July.
That is the figure used in the triple lock formula which dictates that the state pension will increase in line with average wages, inflation or 2.5% each year, whichever is higher.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, explains:
“State pensioners look on course to get an 4.7% uplift in their state pension next year as average wage growth remained robust. Such an increase would see a full new state pension rise from its current level of £230.25 per week to £241.05 per week from April. Those retiring on the basic state pension would see their weekly income increase from £176.45 per week to £184.75.
However, the hike is not yet set in stone. We are awaiting the final piece of the triple lock puzzle – September’s inflation data to be published next month and if this surpasses 4.7% then we could see an even bigger increase. However, given that inflation currently sits at 3.8% it seems likely that wage growth will be the key figure here.
Morrissey adds that the system creates some complexity for pensioners:
Those on the new state pension will receive the uplift but those on the basic state pension will only receive it on their main state pension. Any further top ups such as the state second pension are usually uprated in line with inflation instead, so they won’t get the full benefit of the triple lock on their entire payment.
Rachel Vahey, head of public policy at AJ Bell, points out that the state pensions will be close to the personal allowance of £12,570 – pensioners with additional income (such as a second pension) would then pay income tax on earnings over that limit.
Vahey says:
“Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee, with the latest ONS earnings growth figure coming in at 4.7% for the period between May and July of this year.
“Under the triple lock guarantee, the state pension will rise by the highest of average earnings growth in May to July, September’s inflation figure or 2.5%. Provided inflation doesn’t spike above 4.7% in September, all stars point to these latest earnings figures boosting the new state pension to £12,534.60 from April 2026 – putting it above £12,000 for the first time ever and perilously close to the frozen personal allowance.
The triple lock is a political pledge, not laid down in legislation, so pensions aren’t guaranteed to rise as outlined above. But in July, then work and pensions secretary Liz Kendall said the government was commited to the pensions triple lock “for the entirety of this Parliament”….
Updated at 03.28 EDT
UK jobs data: political reaction
The UK’s new Work and Pensions Secretary, Pat McFadden, has spotted some bright spots in today’s labour market reports.
He points to a drop in the economic inactivity rate (people neither in work nor looking for a job), which dipped by 0.02 percentage points over the last quarter to 21.1%.
McFadden says:
“Today’s figures show signs of progress with economic inactivity and redundancies continuing to fall.
“But we must futureproof our workforce by giving people the opportunities and skills they need to secure the jobs of tomorrow.
“It is vital that our £240 million Get Britain Working plan is felt by people across the country, whether it’s through targeted support for young people entering the workforce, or joining up work, health and skills support.
“The true strength of the UK’s economy lies in the British people, which is why we are unlocking opportunity in every part of the country to drive forward economic growth under our plan for change.”
But Daisy Cooper, the Liberal Democrat Treasury spokesperson, said Labour had committed an act of “self sabotage” by pushing more people out of work.
Cooper added:
“[It has put] even more pressure on already stretched public services and leaving businesses scrambling just to keep the lights on.”
ShareJLR production pause extended until Wednesday 24 September
Jaguar Land Rover has extended the shutdown of its car production for another week, as it continues to reel from a disruptive cyber attack.
JLR says it told its staff, suppliers and partners today that it has extended the current pause in our production until Wednesday 24 September.
JLR explains:
We have taken this decision as our forensic investigation of the cyber incident continues, and as we consider the different stages of the controlled restart of our global operations, which will take time.
We are very sorry for the continued disruption this incident is causing and we will continue to update as the investigation progresses.
The company’s factory lines have already been frozen for two weeks, since JLR’s manufacturing and retailing activities were “severely disrupted” by a cyber incident.
Last week, JLR revealed the hack had affected ‘some’ of its data.
The disruption is hurting the company’s suppliers; last week, the Unite union warned that thousands of workers in the JLR supply chain are at risk of losing their livelihoods, and urged the government to step in with a furlough scheme to support them.
Updated at 02.47 EDT
153,000 payroll jobs lost since last year’s budget
Today’s jobs report also shows that slightly fewer jobs have been lost since Rachel Reeves’s first budget than feared.
Capital Economics’ UK economist, Ashley Webb, explains:
The 8,000 fall in payroll employment in August was the ninth monthly fall in the ten months since the October Budget. But previous revisions mean that instead of having fallen by 165,000 in total since October, payroll employment is now thought to have fallen by 153,000.
Monica George Michail, associate economist at the National Institute of Economic and Social Research (NIESR), predicts wage growth will slow further by the end of the this year:
“Today’s figures show that unemployment stands at 4.7%, its highest level in four years, and hiring momentum is rapidly slowing, with the number of jobseekers more than double the available vacancies. This suggests that wage growth will likely continue to fall, approaching 4% by year-end, according to our forecast.
A moderation in pay growth would keep the door open for further interest rate cuts by the Bank of England, after a prolonged period of elevated wage pressures.
On the fiscal front, rising unemployment will likely deter the Chancellor from further raising taxes on businesses in the next budget to avoid weighing on growth”.
Unemployment could soon hit 5%, fears Suren Thiru, economics director at ICAEW (The Institute of Chartered Accountants in England and Wales).
“These figures suggest that the UK’s jobs market is wilting under the weight of a stagnating economy and skyrocketing staffing costs as more businesses look to shrink their workforce in response to these twin headwinds.
While the pace at which pay growth is slowing remains painfully pedestrian, its current downward trajectory should gather momentum over the autumn as the eyewatering financial squeeze on businesses takes its toll on pay awards.
The UK’s labour market is likely to encounter more adverse turbulence in the coming months as surging costs for businesses and weaker customer demand amid a slowing economy could mean the unemployment rate soon tops 5%.”
ShareUK unemployment rate still at four-year high
The UK’s jobless rate has stuck at a four-year high in the last quarter.
The unemployment rate stuck at 4.7% in May-July, the Office for National Statistics reports, for the third month in a row.
That’s up from 4.6% in February-April (the previous quarter).
As this chart shows, unemployment hadn’t been that high since April-June 2021.
A chart showing the UK’s unemployment rate Photograph: ONSShareUK wage growth slows as jobs market cools
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Wage growth across Great Britain has slowed, as the jobs market cools and companie cut jobs.
The latest labour market data, just released, shows that annual growth in employees’ average earnings (excluding bonuses) slowed to 4.8% in May-July this year, down from 5% a month earlier.
With inflation rising in recent months (to 3.8% in July), this slowdown in earnings means households will be squeezed harder by the cost of living.
Pay rose faster in the public sector – up 5.6% per year – compared with 4.7% for the private sector, the Office for National Statistics reports.
The ONS also flags that company payrolls shrank, by an estimated 142,000 in the year between July 2024 and July 2025, a sign that companies have been cutting back on hiring due to economic uncertainty and the rise in employers’ national insurance rates.
The estimated number of vacancies in the UK fell by 10,000 to 728,000, in June to August, today’s data shows. That’s the 38th consecutive quarterly fall.
ONS director of economic statistics Liz McKeown says:
“The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.
“This weakness is reflected in a slight increase on the quarter in the unemployment rate. The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing.
“Wage growth excluding bonuses edged down further in cash terms, though it remains strong by historic standards.”
Also coming up today….
Chancellor Rachel Reeves will host bosses of top US and UK financial firms in Downing Street on Tuesday morning as the government tries to highlight economic ties between the two countries at the start of Trump’s state visit.
The meeting, which will be jointly hosted by US Treasury Secretary Scott Bessent, will see senior bosses from BlackRock, Barclays and Blackstone gather in Whitehall as the chancellor seeks to secure further foreign investment that could help spur growth, and deliver positive headlines ahead of a challenging autumn budget in November.
The agenda
7am BST: UK labour market data
8am BST: Worldpanel’s UK supermarket inflation data
11am BST: Israel’s Q2 GDP report
1.30pm BST: US retail sales for August
2.15pm BST: US industrial production data for August
3pm BST: Parliament’s science committee to examine Merck’s decision to abandon the expansion of its UK operations.