Ditch the triple-lock?
The business news that matters
A scheduling note: There will be no Off to Lunch tomorrow, back on Thursday
New data about the jobs market in the UK shows that average earnings are up 7.8 per cent year-on-year (8.5 per cent including bonuses), while unemployment has risen by 0.5 percentage points to 4.3 per cent and the number of job vacancies has fallen by 64,000 to 989,000.
The data on average earnings is already getting a lot of attention today because this September announcement from the Office for National Statistics dictates the annual increase in the state pension.
The triple-lock means that the state pension increases every year by whatever is highest out of inflation, average earnings growth or 2.5 per cent. Today’s news means that the state pension will increase by at least 8.5 per cent, which is the figure for average earnings growth including bonuses. The data on inflation is due next week but is expected to show that the consumer price index is below this at around 6.5 per cent.
The Institute for Fiscal Studies, the think tank, has calculated the cost of an 8.5 per cent increase in the state pension, which is eye-watering, as you can see below…
William Hague has written in his latest column for The Times today that the triple-lock is “ultimately unsustainable”, adding: “Somehow the main political parties have to give themselves, and each other, the space to amend it.” You can read that column here
At the heart of Hague’s column is a concern about inter-generational fairness, with younger generations having to pay record prices to buy or rent a home. Separately, Alun Francis, the chairman of the government’s Social Mobility Commission, has warned in an interview with the Financial Times that the new generation of young graduates are at risk of being financially worse-off than older generations. “They’re starting to feel the social mobility story doesn’t work anymore,” he says. You can read more about his comments in the FT here
Interestingly, Angela Rayner, Labour’s deputy leader, has refused to confirm today whether her party would keep the triple-lock if they win the general election…
Aside from the data on average earnings - which is the same as last month and shows pay is still growing at a record rate - an important takeaway from the ONS release is the rise in unemployment and drop in job vacancies over the last three months, which suggests that the labour market is weakening. The unemployment rate of 4.3 per cent is the highest since September 2021. The Resolution Foundation says that the data shows the biggest drop in employment on record outside a recession in the UK…
However, there is one last thing I want to note about the data. Given the significant revisions to GDP data recently, how much can we actually trust these figures? Chris Giles, economics editor of the FT, has some concerns…
Other stories that matter…
1. Demand for oil, natural gas and coal will peak before 2030 and it is “the beginning of the end” for the use of fossil fuels, the International Energy Agency has forecast in a new report. Financial Times story here
2. A collection of new, small and university-like institutions across the UK are helping to train a new generation of engineers. This includes the Dyson Institute in Wiltshire and the New Model Institute for Technology and Engineering in Hereford. An interesting piece by The Economist here
3. Those in the UK outside London and the south-east of England will roll their eyes in frustration at the idea of that area getting more investment in transport infrastructure. But there is a compelling case that extending the Elizabeth Line to Ebbsfleet and North Kent can improve productivity and boost the supply of new homes in the UK. At least that is according to an analysis by the Odds and Ends of History newsletter here
4. The G20 summit in India is evidence that globalisation is not over but is instead shifting from China to a focus on India and other developing countries in south Asia, Africa and South America. Piece by the Noahpinion newsletter here
5. There is a growing focus on how businesses can sustain high performance over a longer period of time and avoid burnout. Our podcast episode with author Catherine Baker looked at what businesses can learn from sport on this topic (you can listen to that here). A new report has found that working at 85 per cent of your capacity is the optimal level of performance, rather than giving 100 per cent. The actor Hugh Jackman is among those to have promoted this way of working in the past. Times story here
And finally…
The first week of the NFL season in the US ended with an extraordinary game between the New York Jets and the Buffalo Bills…
Firstly, the Jet’s new quarterback Aaron Rodgers got an incredible reaction from the crowd as he ran on to the field for the first time in New York carrying the American flag on the 22nd anniversary of 9/11…
But the Jets suffered a nightmare start when Rodgers went down injured with a suspect ruptured Achilles tendon early in the game, which is expected to rule him out for the entire season.…
Nonetheless, the Jets hung in the game against the Bills, one of the favourites to win the Superbowl, and took the lead in the fourth quarter. But a last-second field goal from the Bills sent the game into overtime…
Then, in overtime, the Bills punted the ball into the hands of Xavier Gipson, a rookie playing his first NFL game for the Jets. Gipson was not actually picked in the NFL draft but signed with the Jets as an undrafted free agent after impressing them during the summer training camp. This is what happened next…
One of the first people to join the celebrations was Robert Saleh, coach of the New York Jets. His brother was working in the Twin Towers on 9/11 and survived. Saleh says that 9/11 changed his approach to life, causing him to quit his office job and go into coaching, as he explains in the video below…
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Best
Graham