State pension to rise by £460 next year

The state pension is set to rise by £460 a year from April after the latest official data showed wages grew by 4 per cent.
Under the so-called “triple lock”, the state pension goes up each year by either 2.5 per cent, inflation, or average earnings – whichever is the highest figure.
The Office for National Statistics (ONS) today reported that, including bonuses, pay rose by 4 per cent annually over the three months to July. The was down from 4.6 per cent in the previous quarter and below economists’ expectations of growth of 4.1 per cent. Inflation is currently 2.2 per cent.
Wages have fallen for the fourth month in a row as demand for workers receded. It signalled that the labour market had gradually cooled amid a rise in interest rates and sluggish consumer spending and raised the chances that the Bank of England will cut interest rates again later this year.
Easing pay growth is seen by the Bank of England as key to bringing inflation to heel over the long term, suggesting that the latest step down in wage settlements could convince the central bank’s rate-setting committee to lower borrowing costs again.
The rate of unemployment dropped to 4.1 per cent from 4.2 per cent. The ONS said: “The estimated number of vacancies in the UK in June to August 2024 was 857,000, a decrease of 42,000 or 4.7 per cent from March to May 2024.”
The monetary policy committee, the nine-strong group tasked with setting the base level of interest in the UK every six weeks, is expected to keep the base rate unchanged at 5 per cent at its meeting next Thursday.
However, investors believe that the MPC will cut borrowing costs at its November meeting and bring the base rate down to around 3.5 per cent by the end of 2025. A slim 5-4 majority of MPC, including Andrew Bailey, the governor of the Bank, backed lowering interest rates by 25 basis points from 5.25 per cent on August 1.
Liz McKeown, director of economic statistics at the ONS, said: “Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures. Basic pay growth also continued to slow, though less sharply.”
“When taken together on a comparable basis, our different measures all show growth in the number of employees over the latest quarter, though annual growth has slowed over the year. Meanwhile, there was a decrease in the number of self-employed people and a fall in both those looking for a job and not looking for or available to start working.”
The rate of economic inactivity, when a person is neither employed nor looking for a job, dropped to 21.9 per cent over the last quarter.
Britain’s economy has been constrained by an outflux of workers from the labour market since the Covid-19 pandemic, which experts think has been driven by increased prevalence of long-term sickness.
Since Labour won the election in July, economic data has been broadly positive, with ONS figures showing that UK GDP expanded at the quickest pace in the G7 in the first half of this year.
Although inflation increased to 2.2 per cent in the year to July, it remains close to the Bank of England’s official target of 2 per cent.