Closing post
Time to wrap up….
Millions of people are poised for an above-inflation 4.7% increase in their state pension payments, adding to pressure on the government finances as Rachel Reeves explores raising taxes at the autumn budget.
Labour has committed to retaining the triple lock on the state pension, which guarantees annual increases in line with whichever is the higher of 2.5%, inflation in September or annual earnings growth in the three months to July.
Official figures published on Tuesday show average weekly earnings including bonuses were 4.7% higher in May to July than in the same period a year earlier.
Experts said the increase put state pensioners in line for their payments to go up by that amount from next April because inflation in September – currently running at 3.8% – was unlikely to be higher.
A final decision will be taken by the government before the budget. However, Pat McFadden, the work and pensions secretary, confirmed on Tuesday that the triple lock promise would be honoured.
He said:
“That’s a commitment from the Labour government to the UK’s pensioners. It’s something that we said we’d do at the election and something that we will keep to.”
Jaguar Land Rover has extended its shutdown on car production, as Britain’s biggest carmaker grapples with the aftermath of a cyber-attack.
JLR said it would freeze production until at least next Wednesday, 24 September, as it continues its investigations into the hack, which first emerged earlier this month.
The manufacturer said:
“We have taken this decision as our forensic investigation of the cyber incident continues, and as we consider the different stages of the controlled restart of our global operations, which will take time.
“We are very sorry for the continued disruption this incident is causing and we will continue to update as the investigation progresses.”
Looking ahead to tomorrow’s US interest rate decision, a hawkish tone from the Fed could spark a ‘sell the news’ pullback in the markets.
So suggests Chris Beauchamp, chief market analyst at investment and trading platform IG:
“Despite the dramatic build-up to tomorrow’s nailed-on rate cut, the dull reality is that a 25bps move is merely the expected result. What everyone is watching for is any hint of more cuts to come.
“Markets have merrily priced in a progression of easing moves in October and December, but if the committee strikes a more hawkish note, then we may finally see some volatility emerge with traders ‘selling the news’. This could well lead to an early-Autumn pullback in equity markets ahead of the next Fed meeting.”
Stocks have opened cautiously on Wall Street, as investors anticipate a cut to US interest rates tomorrow.
The Dow Jones industrial average is down 0.1%, or 42 points, at 45,840 points.
The broader S&P 500 index is flat, as is the tech-focused Nasdaq.
Ineos Group's credit rating cut
Sir Jim Ratcliffe’s chemicals empire has suffered a blow from ratings agency Fitch overnight.
Fitch has downgraded INEOS Group to ‘BB-’, with a negative outlook, down from BB. That’s a one-notch fall, to the 13th place on Fitch’s scale of credit worthiness, and still leaves Ineos ranked as ‘non-investment grade’.
Explaining the decision, Fitch points out that Ineos is increasingly highly leveraged, due to the “weak chemical market” and high spending on a new ethane cracker in the Port of Antwerp.
Fitch also predicts that Ineos’s revenue to grow by 2% on average in 2025-2029, after growing 9% in 2024.
A lower credit rating implies a higher risk of default, or debt restructuring, and can result in higher borrowing costs.
Updated
Last summer’s extremely hot weather was not great for the European and Ukrainian sunflower crop.
Ukrainian and European sunflower oil prices have jumped, Bloomberg reports, as forecasters expect low yields in the country and limited production across the continent.
That’s because the hot, dry summer hampered crop development.
There are forecasts that Europe could see its worst sunflower harvest in a decade, while harvesting in Ukraine is slow following a drought this year.
Bloomberg explains:
In Ukraine, sunflower yields are expected to fall below the five-year average “largely due to the drought in the south, where most sunflower cultivation takes place,” the European Union’s Monitoring Agricultural Resources unit said in a report.
Europe is facing similar challenges, with top producer France expecting output to drop 15% below the five-year average, according to figures from the French agriculture ministry.
US retail sales stronger than expected in August
Over in the US, retail sales were stronger than expected last month – which might deter the Federal Reserve from a surprisingly hefty interest rate cut tomorrow.
Spending at retail and food services sites jumped by 0.6% month-on-month in August, and were 5% higher than in August 2024.
Economists had expected a smaller rise, of 0.2%.
It’s an encouraging sign for US economic growth, but could also encourage Fed policymakers to vote for a quarter-point cut to interest rates, rather than a larger, half-point cut.
U.S. retail sales stronger than expected. Hindrance for a 50 bp cut tomorrow? #retail
— Ronnie (@Ronmarkets2) September 16, 2025
Spending at “nonstore retailers” (ie, internet shopping) were up 10.1% year-on-year, while spending at food service and drinking places rose 6.5% compared with a year earlier.
Britain’ Competition and Markets Authority has launched a merger inquiry into payments provider Global Payments’ $24.25bn acquisition of rival Worldpay.
The CMA will examine whether the deal, announed in April, could lessen competition in UK markets.
The CMA has set a deadline of November 11 to reach its Phase 1 decision.
Over on Downing Street, chancellor Rachel Reeves has welcomed US treasury secretary Scott Bessent to the Treasury:
Reeves and Bessent then began hosting a roundtable with the bosses of top US and UK financial firms from the City and Wall Street:
Draghi: Europe in 'harder place' than a year ago
It’s a year since former Italian PM Mario Draghi’s landmark report, which warned that the EU risked “agonising decline” without an €800bn investment boost.
Today, Draghi has warned that Europe was “in a harder place” than one year ago, and suggested that Europe actually needs annual investments of nearly €1,200bn, up from €800bn last year, with increasing demand for defence.
The former head of the European Central Bank made the case for common debt, if not at EU level, then among a group of member states - reflecting the fact some MS are starkly opposed to more joint borrowing. He also said European countries needed to join forces in LNG procurement to bring down energy prices, something that is already possible, but little used. Europe, he said, needed to stop acting like a confederation and more like a federation.
He drew attention to European weakness on defence and trade, without directly blaming anyone for the EU-US trade deal agreed this sumer, saying:
“Reliance on the US for defence was quoted as one of the reasons we had to accept a trade deal largely on American terms. Dependence on Chinese critical materials has curtailed our ability to prevent China’s overcapacity from flooding Europe, or to counter its support for Russia.”
And he was downbeat on the EU’s adoption of AI, pointing to low adoption by small and medium companies, while Europe has produced only three large foundation models last year, compared to 40 in the US and 15 in China. Draghi called for a pause on the next stage of AI regulation on managing risks on critical infrastructure and health, explaining:
In my view, implementation of this stage should be paused until we better understand the drawbacks.
EC president Ursula Von der Leyen said EU member states and parliament needed to act on the Draghi agenda, and said there was not enough urgency on improving competitiveness.
FT: Sky to cut hundreds of jobs in UK
The Financial Times are reporting that Sky is set to cut hundreds of jobs in the UK.
The reductions come as part of a reorganisation to help Sky compete against US streaming giants.
About 900 jobs will be affected by the reorganisation, with about 600 roles expected to be cut from the group’s UK operations, based in west London, and the remainder redeployed within Sky.
Staff at risk of losing their jobs were being given the bad news today, with many cuts anticipated to land in the broadcaster’s tech-focused teams. More here.
Investors most bullish since February, but UK stock allocations shrink
Investors are their most optimistic in months, according to new data from Bank of America.
BofA’s latest Global Fund Manager Survey shows that investors are their most bullish since February this month, thanks to a big jump in global growth optimism.
Allocations to equities have hit a seven-month high, as fears of a “recessionary trade war” faded in recent weeks.
BofA’s team, led by investment strategist Michael Hartnett, reports the biggest jump in growth expectations since October 2024, with two-thirds of investors now expecting a soft landing (in which inflation falls without causing a recession).
“Bulls [are] feasting on trade war ending, rate cuts starting,” they say.
However, September has also seen the biggest monthly rotation out of UK equities since April 2004.
Bank of America reports that this selloff means allocations to UK stocks is now the lowest since March 2024.
There had been a surge of money into UK stocks earlier this year, partly due to relief that Britain agreed an early trade deal with Donald Trump.
Updated
Nine million fewer pensioners received winter fuel payments
More than nine million pensioners missed out on the Winter Fuel Payment (WFP) last winter, after Rachel Reeves restricted the payment to poorer households.
New government data shows that there were 1.3 million WFP recipients in winter 2024-2025, a decrease of 9.3 million compared with winter 2023 to 2024.
That follows the chancellor’s decision in July 2024 to restrict winter fuel payments to those on pension credits or other means-tested benefits.
Back in June, Reeves pulled a u-turn, saying all pensioners with an income of £35,000 or less a year will have the winter fuel payment restored in full.
Independent Age chief executive Joanna Elson, CBE, says today’s Winter Fuel Payment numbers highlight “the sheer scale of the cuts made to the entitlement last year”, adding:
The UK Government was right to widen the eligibility criteria for this coming winter, no older people living on a low income should miss out on this vital entitlement.
“Worryingly, scammers are using the uncertainty around the Winter Fuel Payment as a means of targeting those in later life. This entitlement is there to protect older people in financial hardship during the winter months. This payment will be made automatically to anyone aged 66 and over. For anyone with an annual income over £35,000, HMRC will take back the payment. So, there is no need for anyone to provide the UK Government with any additional information. If you have been the victim of a scam, you can find useful information on our website https://www.independentage.org/get-advice.”
Updated
Pound at two-month high
The pound has hit a two-month high against the dollar, as traders anticipate a cut to US interest rates tomorrow.
Sterling has risen by a third of a cent this morning to $1.363, the highest since 8 July.
The dollar is dropping generally, with the US Federal Reserve widely expected to cut interest rates on Wednesday. Its two- day meeting begins today, after Donald Trump’s attempt to oust governor Lisa Cook before the meeting failed.
The dollar is “being roundly offered ahead of the Fed decision”, reports Neil Wilson, UK investor strategist at Saxo Markets.
George Vessey, lead FX and macro strategist at Convera, says while UK wage growth is easing, it’s still too high for the Bank of England (BoE) to consider rate cuts:
“GBP/USD surged past $1.36 this morning, building on its strongest close since July 7, after the latest UK labour market data reinforced expectations that the Bank of England (BoE) will hold rates steady.
The report showed wage growth remained elevated, suggesting inflationary pressures are still too persistent for the BoE to begin cutting rates.”
Kathleen Brooks, research director at XTB, says promises of UK investment surrounding Donald Trump’s state visit this week are also helping sterling:
Momentum is on the upside for the pound for a few reasons. FX investors are pricing in the prospect of US corporate investment into the UK.
This is unusual, President Trump does not usually like the idea of US firms investing elsewhere, however, the UK has a special place in his heart, and this week’s state visit by President Trump could warm the market towards UK assets once more.
Already this morning, Google has said it will invest £5bn in the UK in the next two years to help meet growing demand for artificial intelligence services….
Pat McFadden, secretary of state for Work and Pensions, has confirmed the government is committed to maintaining the pensions triple lock for this parliament, Sky News’s Sam Coates reports:
Labour’s Pat McFadden recommits to the triple lock (I didn’t know it was in doubt?!) pic.twitter.com/apYq8Ic5S5
— Sam Coates Sky (@SamCoatesSky) September 16, 2025
Updated
UK interest rate cut highly unlikely this week
Today’s labour market report is very unlikely to spur the Bank of England to cut interest rates this week.
Although basic wage growth (excluding bonuses) dipped to 4.8%, that is still uncomfortably high for the more hawkish policymakers at the BoE, especially with inflation heading towards 4%, twice its official target.
The money markets indicate there is a 97% chance that the Bank leaves interest rates on on hold at 4% at its next meeting on Thursday, with a rate cut to 3.75% now not fully priced in until April 2026.
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, says:
The vote is unlikely to be unanimous - the 9-person Monetary Policy Committee has been split for months, and perma-doves Swati Dhingra and Alan Taylor aren’t likely to be swayed, irrespective of the steady rise in consumer prices.
“In August the MPC flagged its discomfort regarding the near-term outlook for consumer prices, a view subsequently confirmed by stronger than expected price pressures in July. While dissenting MPC doves argue that rising inflation may prove transient, the upward trajectory of price pressures creates an uncomfortable backdrop for the majority to vote for a consecutive loosening.
Grocery inflation slows to 4.9%
There is some relief in the UK’s cost of living squeeze this morning – grocery price inflation has slowed.
British grocery inflation fell to 4.9% over the four weeks to 7 September, data from Worldpanel by Numerator shows. That’s down from 5% the previous month, but means grocery prices are still rising a little faster than wages.
Fraser McKevitt, head of retail and consumer insight at Worldpanel, reports that more consumers are turning to supermarkets own label lines rather than branded goods (which are typically more expensive):
Supermarkets’ own lines now make up 51.2% of all sales, up from 50.9% a year ago.
Sales of these products grew by 5.9% this period, just ahead of brands at 5.3%, but it’s the premium own label goods which are the real standout performers.
Sales rose by an impressive 10.3% making it six months in a row that they’ve increased by double digits.
However, brands are holding ground in some categories, including toothbrushes, frozen chicken and baby toiletries, showing that consumers still value well-known names across some very different parts of the store.”
Worldpanel’s report also shows that Tesco’s sales have risen by 7.7% year-on-year in the last 12 weeks, followed by Sainsbury’s with 5.4%, Morrisons with 1.4% growth, and Asda whose sales fell by 2.7%, while Co-op grocery sales fell 2%.
Among discount chains, Lidl’s sales jumped by 11% while Aldi grew by 4.7%.
Online grocer Ocado’s sales jumped by 11.9% year-on-year.
State pension on course for 4.7% rise under triple lock
UK pensioners can look forward to a 4.7% increase in their state pensions next year, if the government sticks with the triple-lock.
This morning’s labour market data shows that average wage growth (including bonuses) was 4.7% between May to July.
That is the figure used in the triple lock formula which dictates that the state pension will increase in line with average wages, inflation or 2.5% each year, whichever is higher.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, explains:
“State pensioners look on course to get an 4.7% uplift in their state pension next year as average wage growth remained robust. Such an increase would see a full new state pension rise from its current level of £230.25 per week to £241.05 per week from April. Those retiring on the basic state pension would see their weekly income increase from £176.45 per week to £184.75.
However, the hike is not yet set in stone. We are awaiting the final piece of the triple lock puzzle – September’s inflation data to be published next month and if this surpasses 4.7% then we could see an even bigger increase. However, given that inflation currently sits at 3.8% it seems likely that wage growth will be the key figure here.
Morrissey adds that the system creates some complexity for pensioners:
Those on the new state pension will receive the uplift but those on the basic state pension will only receive it on their main state pension. Any further top ups such as the state second pension are usually uprated in line with inflation instead, so they won’t get the full benefit of the triple lock on their entire payment.
Rachel Vahey, head of public policy at AJ Bell, points out that the state pensions will be close to the personal allowance of £12,570 – pensioners with additional income (such as a second pension) would then pay income tax on earnings over that limit.
Vahey says:
“Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee, with the latest ONS earnings growth figure coming in at 4.7% for the period between May and July of this year.
“Under the triple lock guarantee, the state pension will rise by the highest of average earnings growth in May to July, September’s inflation figure or 2.5%. Provided inflation doesn’t spike above 4.7% in September, all stars point to these latest earnings figures boosting the new state pension to £12,534.60 from April 2026 – putting it above £12,000 for the first time ever and perilously close to the frozen personal allowance.
The triple lock is a political pledge, not laid down in legislation, so pensions aren’t guaranteed to rise as outlined above. But in July, then work and pensions secretary Liz Kendall said the government was commited to the pensions triple lock “for the entirety of this Parliament”….
Updated
UK jobs data: political reaction
The UK’s new Work and Pensions Secretary, Pat McFadden, has spotted some bright spots in today’s labour market reports.
He points to a drop in the economic inactivity rate (people neither in work nor looking for a job), which dipped by 0.02 percentage points over the last quarter to 21.1%.
McFadden says:
“Today’s figures show signs of progress with economic inactivity and redundancies continuing to fall.
“But we must futureproof our workforce by giving people the opportunities and skills they need to secure the jobs of tomorrow.
“It is vital that our £240 million Get Britain Working plan is felt by people across the country, whether it’s through targeted support for young people entering the workforce, or joining up work, health and skills support.
“The true strength of the UK’s economy lies in the British people, which is why we are unlocking opportunity in every part of the country to drive forward economic growth under our plan for change.”
But Daisy Cooper, the Liberal Democrat Treasury spokesperson, said Labour had committed an act of “self sabotage” by pushing more people out of work.
Cooper added:
“[It has put] even more pressure on already stretched public services and leaving businesses scrambling just to keep the lights on.”
JLR production pause extended until Wednesday 24 September
Jaguar Land Rover has extended the shutdown of its car production for another week, as it continues to reel from a disruptive cyber attack.
JLR says it told its staff, suppliers and partners today that it has extended the current pause in our production until Wednesday 24 September.
JLR explains:
We have taken this decision as our forensic investigation of the cyber incident continues, and as we consider the different stages of the controlled restart of our global operations, which will take time.
We are very sorry for the continued disruption this incident is causing and we will continue to update as the investigation progresses.
The company’s factory lines have already been frozen for two weeks, since JLR’s manufacturing and retailing activities were “severely disrupted” by a cyber incident.
Last week, JLR revealed the hack had affected ‘some’ of its data.
The disruption is hurting the company’s suppliers; last week, the Unite union warned that thousands of workers in the JLR supply chain are at risk of losing their livelihoods, and urged the government to step in with a furlough scheme to support them.
Updated
153,000 payroll jobs lost since last year's budget
Today’s jobs report also shows that slightly fewer jobs have been lost since Rachel Reeves’s first budget than feared.
Capital Economics’ UK economist, Ashley Webb, explains:
The 8,000 fall in payroll employment in August was the ninth monthly fall in the ten months since the October Budget. But previous revisions mean that instead of having fallen by 165,000 in total since October, payroll employment is now thought to have fallen by 153,000.
Monica George Michail, associate economist at the National Institute of Economic and Social Research (NIESR), predicts wage growth will slow further by the end of the this year:
“Today’s figures show that unemployment stands at 4.7%, its highest level in four years, and hiring momentum is rapidly slowing, with the number of jobseekers more than double the available vacancies. This suggests that wage growth will likely continue to fall, approaching 4% by year-end, according to our forecast.
A moderation in pay growth would keep the door open for further interest rate cuts by the Bank of England, after a prolonged period of elevated wage pressures.
On the fiscal front, rising unemployment will likely deter the Chancellor from further raising taxes on businesses in the next budget to avoid weighing on growth”.
Unemployment could soon hit 5%, fears Suren Thiru, economics director at ICAEW (The Institute of Chartered Accountants in England and Wales).
“These figures suggest that the UK’s jobs market is wilting under the weight of a stagnating economy and skyrocketing staffing costs as more businesses look to shrink their workforce in response to these twin headwinds.
While the pace at which pay growth is slowing remains painfully pedestrian, its current downward trajectory should gather momentum over the autumn as the eyewatering financial squeeze on businesses takes its toll on pay awards.
The UK’s labour market is likely to encounter more adverse turbulence in the coming months as surging costs for businesses and weaker customer demand amid a slowing economy could mean the unemployment rate soon tops 5%.”
UK unemployment rate still at four-year high
The UK’s jobless rate has stuck at a four-year high in the last quarter.
The unemployment rate stuck at 4.7% in May-July, the Office for National Statistics reports, for the third month in a row.
That’s up from 4.6% in February-April (the previous quarter).
As this chart shows, unemployment hadn’t been that high since April-June 2021.
UK wage growth slows as jobs market cools
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Wage growth across Great Britain has slowed, as the jobs market cools and companie cut jobs.
The latest labour market data, just released, shows that annual growth in employees’ average earnings (excluding bonuses) slowed to 4.8% in May-July this year, down from 5% a month earlier.
With inflation rising in recent months (to 3.8% in July), this slowdown in earnings means households will be squeezed harder by the cost of living.
Pay rose faster in the public sector – up 5.6% per year – compared with 4.7% for the private sector, the Office for National Statistics reports.
The ONS also flags that company payrolls shrank, by an estimated 142,000 in the year between July 2024 and July 2025, a sign that companies have been cutting back on hiring due to economic uncertainty and the rise in employers’ national insurance rates.
The estimated number of vacancies in the UK fell by 10,000 to 728,000, in June to August, today’s data shows. That’s the 38th consecutive quarterly fall.
ONS director of economic statistics Liz McKeown says:
“The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.
“This weakness is reflected in a slight increase on the quarter in the unemployment rate. The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing.
“Wage growth excluding bonuses edged down further in cash terms, though it remains strong by historic standards.”
Also coming up today….
Chancellor Rachel Reeves will host bosses of top US and UK financial firms in Downing Street on Tuesday morning as the government tries to highlight economic ties between the two countries at the start of Trump’s state visit.
The meeting, which will be jointly hosted by US Treasury Secretary Scott Bessent, will see senior bosses from BlackRock, Barclays and Blackstone gather in Whitehall as the chancellor seeks to secure further foreign investment that could help spur growth, and deliver positive headlines ahead of a challenging autumn budget in November.
The agenda
7am BST: UK labour market data
8am BST: Worldpanel’s UK supermarket inflation data
11am BST: Israel’s Q2 GDP report
1.30pm BST: US retail sales for August
2.15pm BST: US industrial production data for August
3pm BST: Parliament’s science committee to examine Merck’s decision to abandon the expansion of its UK operations.
