Boost for the silver surfers
SOMETIMES you have to smile. the inconsistent way in which morning bulletins interpret the latest economic data is all about extracting the most negative message. For much of the last two years, as the cost-of-living crisis flared, the universal message about wages was that they were not rising fast enough to keep up with inflation and we are all poorer as a result.
this narrative almost certainly contributed to the wearying industrial unrest which has destroyed any faith the trains will ever run on time again.
Latest official data shows that average pay was up 7.9pc on last year in the three months to April. Private sector settlements, closely monitored by the Bank of england, slowed marginally to 8pc, excluding bonuses. this, it is now explained, means that wages are outpacing consumer prices, up 6.7pc in August. However, it is a bad thing because it probably means that the Bank of england may have to raise interest rates again beyond the current 5.25pc.
that would almost certainly be the case if some of the trade unions have their way. Just as the weather becomes colder, there is a chilling press release from the GMB union. it argues that the pay of GMB members at energy construction sites across the nation has fallen 20pc behind inflation, and up to 3,000 workers at sites as important as Grangemouth and the sellafield nuclear facility have voted to take industrial action.
A pay offer of 8.5pc for 2024 and 3.5pc in 2025 does not, in their view, cut the mustard, in spite of the sharp downward trend in inflation. Whether the strikes could damage the country’s fuel security this winter, with war still raging in Ukraine and conflagration in the middle east, is not clear.
As it happens, there is almost certainly enough better data in the latest labour market bulletin to keep the hawks on the Bank’s interest rate setting monetary Policy Committee at bay. even though wage settlements exceed consumer price inflation they are trending down. Both regular pay and private sector pay in August were at five-month lows.
on the jobs front, an incomplete data set shows that while vacancies are standing at 988,000, they have fallen for 15 months in a row. tightness in the jobs market is easing.
so the Bank’s wait-and-see approach to raising interest rates after last month’s pause should be extended again, which would bring relief to home buyers.
Another group to muster a small cheer are the nation’s silver army. the Chancellor Jeremy Hunt has reiterated a commitment to the triple Lock. the state pension will rise by around 8pc in the spring in line with average earnings this autumn. maybe too late to help with energy bills, but enough for more than an ice cream.
Powering up
THE full outcome of tufan erginbilgic’s strategic review at Rolls-Royce is not yet known, but the chief executive is losing no time in ringing the changes. some 2,000-to2,500 jobs are to be axed from the 42,000 strong workforce.
His predecessor Warren east’s unenviable task was to keep Britain’s leading engineering group solvent in Covid-19 when one of the main sources of revenues, flying hours, came to a halt. the task for erginbilgic is to ensure a prosperous future.
With the assistance of management consultants mcKinsey, an axe is being taken to back office jobs and a new buying organisation is being created with the aim of cutting component costs.
Rolls-Royce has been a first choice for many carriers in the market for engines for wide-bodied carriers, but it struggles to match Ge Aerospace on price.
the big new opportunity for Rolls is bringing its small modular reactors off the drawing board into reality.
it would be pitiful if the main contract doesn’t go to the manufacturer with the most recognised name in Britain.
Cleaning up
FULL marks to City regulator, the Financial Conduct Authority, for forcing posh investment adviser st James’s Place to change its ways.
expensive early withdrawal penalties are to be axed and fees unbundled so that 900,000 clients, with £47bn under management, can see precisely what they are paying for advice and investment management.
it will hit SJP’s bottom line by as much as £160m over two years.
How did it go unchallenged by clients for so long?