UK unemployment rate lower than expected, but cost of maintaining the pension triple lock looms
The UK unemployment rate is lower than expected, but the cost of maintaining the pension triple lock looms over the upcoming Budget, say leading audit, tax and business advisory firm, Blick Rothenberg.
Robert Salter, a director at the firm, said: “The government previously estimated that the unemployment rate would increase to 5.3% during 2026, so the fact that the latest Office for National Statistics (ONS) data shows that unemployment remains at 4.9% should provide some relief to the Chancellor, John Healey as he looks towards his inaugural Budget.”
He added: “However, there are also some ‘storm clouds’ looming in the ONS release which could prove a challenge for the Chancellor in October. With the state pension triple lock partly linked to average wage inflation in the year to July 2026, it is probable that the state pension will rise by a further 3.9% from April 2027, even though consumer price inflation is presently only 2.9%.”
Robert said: “A 3.9% increase in the basic state pension will increase the government’s expenditure on the state pension by approximately £6bn, which is broadly equivalent to a 1% rise in the basic rate of employee and self-employed National Insurance Contributions (NIC)s.”
He added: “The ONS data also suggests that the unemployment rate has remained stable in the 3 months to July 2026. This relatively stable jobs market will help minimize the amount that the Government needs to spend on social benefits, while also ensuring that the government’s revenues from PAYE and employee and employer NIC – which are key sources of tax revenue remain reasonably strong.”