Pensions to Rise With Inflation Even as UK Urges Pay Restraint
The UK government said the state pension will rise in line with inflation this year, a handout to elderly Britons even as Boris Johnson warned that doing the same for public sector salaries would not be feasible.
Pensions will increase in step with September’s consumer price index, which is due to be “significantly higher than the forecast inflation rate” for the next fiscal year, Simon Clarke, chief secretary to the Treasury, said in a written response to a question in Parliament on Tuesday. It means pensioners are in line for a double-digit percentage increase in their payments next year.
The generous offer to pensioners will play well with Johnson’s Conservative Party base, but is a politically sensitive move at a time when the government is warning both public bodies and private companies to be cautious with pay increases to avoid stoking inflation. Britain’s inflation rate is at a 40-year high of 9%, and the Bank of England expects it to be above 11% from October.
Recent remarks from Chancellor of the Exchequer Rishi Sunak and the Bank of England point to a hardening in attitude to inflation and suggest a switch of emphasis, from supporting growth to preventing a 1970s-style price spiral.
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