UK Jobs Market Stays Weak as Job Vacancies Fall to 702,000

Britain’s jobs market stayed weak as average weekly earnings excluding bonuses grew by 3.5% in the three months to July, while job vacancies in the three months to August fell to 702,000, the lowest since 2014 excluding the COVID-19 pandemic period.

“Job vacancies in the three months to August fell to 702,000”

Reuters

The Office for National Statistics data also showed the tax office’s preliminary measure of payrolled employees dropped by 26,000 in August, and Britain’s unemployment rate held steady at 4.9% in the three months to July.

BBC

The Reuters report said the figures added to expectations that the Bank of England would keep interest rates on hold this week despite inflation pressure from the Iran war, with a big surprise in price data due on Wednesday.R

In a separate account, the BBC said the state pension is expected to rise by £488 the following April based on the latest official earnings figure, reigniting debate about its long-term affordability and generational fairness.

The BBC tied the expected pension increase to the “triple lock” guarantee that the state pension will increase by either average wage growth, inflation or 2.5%—whichever is highest.

The BBC said the flat-rate state pension for those who reached state pension age after April 2016 will likely be £250.70 a week, or £13,036.40 a year, as average wage growth including bonuses stood at 3.9% between May and July.

It also reported that if the state pension rises by 3.9%, it would take the flat-rate state pension above the personal allowance of £12,570 and therefore be liable for income tax.

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Ruth Curtice, chief executive of the Resolution Foundation, told the BBC that the triple lock is “crazy,” and she added that it creates a “ratchet effect” where “pensioners' living standards grow even faster than just a typical worker.”

In the same BBC piece, Business Secretary Jonathan Reynolds refused to confirm that pensioners reliant on the state pension will be exempted from paying income tax, saying: "Any changes to personal allowances, to tax rates, take place in the Budget, that's on 28 October."

The BBC also said Labour made a manifesto pledge to keep the triple lock until 2029, while economists warned about the cost of the policy ahead of the Budget.

The BBC reported that forecasts suggest state pension spending, already at £154bn this year, could go up by a further £600m a year by 2029-30, as the triple lock’s increases build on each other over time.

“Forecasts suggest state pension spending, already at £154bn this year, could go up by a further £600m a year by 2029-30.”

BBC

Jonathan Cribb, deputy director of Institute for Fiscal Studies (IFS) think tank, told the BBC that “Each increase in spending builds upon the last and so the long-run cost is substantial but very uncertain.”

In parallel, Reuters said the Bank of England is trying to gauge whether higher energy prices caused by the Iran war will interrupt a gradual cooling of wage growth and underlying inflation pressure in Britain.R

Reuters also quoted Andrew Wishart, senior UK economist at Berenberg, saying: "Much looser labour market conditions than during the last major energy price shock in 2022 make a new price-wage spiral highly unlikely," while adding expectations that the BoE could signal a hike in November unless energy prices fall back.R

With the BBC warning that the debate over long-term affordability and generational fairness has been reignited, the next steps in the sources hinge on the Bank of England’s decision on Thursday and the September inflation figure that underpins the triple lock calculation.