UK employees and pensioners can raise a glass. Average total pay, including bonuses, rose at an annual rate of 8.5% in the three months to July, faster than inflation. That’s good news for retirees. The government’s “triple-lock” policy means pensions will increase by the same proportion in April 2024. The average state pension will rise from 156.2 pounds to 169.5 pounds per week, according to the Institute for Fiscal Studies.
Bank of England Governor Andrew Bailey and finance minister Jeremy Hunt may, however, be crying into their beer. To pay for the pricier pensions, Hunt will have to stump up an extra 2 billion pounds in 2024 and 2025, at a time when he’s running out of money for tax cuts ahead of an election to be held by January 2025. As for the BoE, a rise in unemployment to 4.3% from 4.2% in the previous quarter suggests its tough rate-rise medicine is beginning to work, but it’s unlikely to mean Bailey can swerve another rate hike next week. Not when inflation is running at 6.8%, more than three times higher than the BoE’s 2% target. (By Francesco Guerrera)
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