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00:00:02Now on BBC News. The latest
00:00:04business news from across the globe.
00:00:06globe. Business Today. Tough choices
00:00:17choices UK state pensions are set
00:00:18set to rise by nearly £500 a year.
00:00:21year. But can the country afford afford the triple lock policy? And
00:00:25And the price of debt? The yield
00:00:26yield on US Treasury bonds hits its
00:00:29its highest level since 2023, with
00:00:31with a fed rate rise now looming.
00:00:35looming. Hello. Welcome. This is is Business Today I'm Ben Thompson
00:00:38Thompson and we start in the UK where where the latest employment data
00:00:41data paints a picture of a rather rather tricky jobs market. If you
00:00:45you take a look first of all at the the employment numbers, those figures figures show that there's been a
00:00:49a slight fall in August. That compares
00:00:51compares to the previous month. It
00:00:55It represents around 26,000 fewer fewer employees in the workforce. workforce. That drop has been mainly
00:00:59mainly in retail and hospitality. hospitality. Well, the quarterly
00:01:02quarterly rate of unemployment that that remains unchanged at 4.9% for
00:01:06for the three months to July. On On top of that, job vacancies remain
00:01:10remain at their lowest level outside outside of the pandemic. But the
00:01:14the wage data tells us a different different story. Annual growth in
00:01:18in employees average earnings, including
00:01:19including bonuses, came in at 3.9%
00:01:223.9% between May and July. Now it it is unchanged from the previous
00:01:25previous period, but the figure is is likely to be a defining factor
00:01:28factor in the rise in the state pension
00:01:31pension next April under the so-called so-called triple lock guarantee, guarantee, the pension will go up
00:01:35up by the highest of either 2.5%
00:01:382.5% inflation or wage growth. So So it means that state pensions would
00:01:41would rise by nearly £500 a year
00:01:45year from next April. Labour made made a manifesto pledge at the election
00:01:48election to keep the triple lock, lock, but economists have warned
00:01:51warned about the cost of the policy policy and that it will mean tough
00:01:54tough spending choices in next month's month's budget. So just how sustainable
00:01:58sustainable is it? Well, let's talk talk now to Heidi Karjalainen, who's
00:02:01who's senior research economist at at the Institute of Fiscal Studies.
00:02:04Studies. It's good to have you here. here. And let me start with that
00:02:07that question. Is the triple lock
00:02:10lock still affordable? Yeah. So basically
00:02:13basically the triple lock is really really important because it determines
00:02:16determines how we operate the state state pension every year. And we
00:02:20we currently spend £154 billion on
00:02:23on the state pension each year. And
00:02:26And that's basically the equivalent equivalent to the total budgets of
00:02:30of the Ministry of Defence and Department Department of Education combined.
00:02:33combined. So that's why all these these decisions around how we're
00:02:36we're going to increase the state state pension matters so much. Now
00:02:40Now the triple lock compared to average average earnings indexation. So that's
00:02:43that's kind of the usually what we we consider as the alternative. Actually Actually this year wouldn't have
00:02:47have made much of a difference because because we think that the average
00:02:51average earnings growth is the highest highest of these three numbers. But
00:02:54But looking forward that's where where we really start seeing those
00:02:57those big spending pressures. And And the government has talked a lot
00:03:01lot about what they call fairness, fairness, making sure that everyone everyone pays their way. We know
00:03:04know there are some tough choices choices that the government will
00:03:07will have to make, but they are just just that. They are choices. The The government can choose what it
00:03:11it does with the money it has and and where it will spend it. But is
00:03:14is it fair when it comes to different different generations about who pays
00:03:17pays the burden of looking after
00:03:19after people in their older age?
00:03:21age? Well, yeah, I think that's basically
00:03:24basically what a lot of this conversation conversation kind of is about is,
00:03:27is, is, is comes to this kind of of generational differences, but
00:03:30but really actually how we operate operate the state pension affects,
00:03:33affects, you know, public finances finances more generally. And, you
00:03:37you know, the challenges are they're they're kind of common across everyone.
00:03:41everyone. We need to or there's are are pledges to spend more on defence.
00:03:45defence. We there's, we tend to have have higher health care spending,
00:03:48spending, social care spending. All All of those pressures apply to everyone
00:03:51everyone really. So so that's why why addressing the triple lock isn't
00:03:55isn't just about kind of generational
00:03:59generational differences, but it's it's really benefits everyone and and the public finances overall in
00:04:03in the long run. We know there have
00:04:04have been attempts to reform pensions pensions in previous years, some
00:04:08some with limited success. And I I wonder whether there needs to now
00:04:12now be a bigger conversation, one one that looks at we're all living
00:04:15living a bit longer, so the cost cost of that welfare benefit is going
00:04:18going up and there's maybe a bit bit of a misconception that a lot
00:04:21lot of people feel they have paid paid in during their lifetime and and therefore are entitled to it.
00:04:25it. But actually what we're all doing doing is just paying for the next
00:04:28next generation, aren't we? Yeah, Yeah, that's absolutely right. And
00:04:32And you're exactly right that there's there's this misconception that,
00:04:35that, you know, people somehow paid paid their National Insurance contributions contributions into a pot and then
00:04:39then they're paid their state pension
00:04:40pension from that. But actually current
00:04:43current pensioners are being paid paid their state pension from current
00:04:46current taxation. So that's why these these challenges of an ageing population,
00:04:50population, for example, where we we have fewer working age people people compared to the size of the
00:04:54the pensioner population. That's That's why that adds a lot more pressure
00:04:58pressure to the system. And I think,
00:04:59think, you know, there is an increasing increasing understanding that the
00:05:03the way that the triple lock increases increases state pension spending
00:05:06spending adds a lot of uncertainty uncertainty and adds a lot of spending.
00:05:09spending. And I think people are are starting to well, there's more
00:05:12more and more talk about how we might might be better off if we move to
00:05:16to a system where we, for example, example, increase the state pension
00:05:19pension in line with average earnings earnings and building building in
00:05:23in some inflation protection as well. well. Heidi, it's good to get your
00:05:26your thoughts on this. I'm sure we'll we'll talk again about it, but for for now, thank you, Heidi Karjalainen
00:05:29Karjalainen there, the senior research research economist at the Institute Institute of Fiscal Studies. Thank
00:05:33Thank you. Well, those latest employment employment and wage figures will
00:05:37will be scrutinised very closely closely by the Bank of England. They They will meet on Thursday. There
00:05:41There will also be casting a close close eye on the latest inflation
00:05:44inflation numbers that are published published tomorrow morning. Rising
00:05:47Rising energy costs caused by the the war in Iran have been pushing pushing up prices right around the
00:05:51the world, which in turn is causing causing a sell off in the bond market
00:05:55market on Monday. The yield on ten ten year US government bonds briefly
00:05:59briefly exceeded 5% for the first
00:06:02first time since 2023, hitting thresholds thresholds that will ring alarm bells.
00:06:05bells. The rise in yields comes during during a continued sell off in the
00:06:09the US Treasury market, which is is estimated to be worth just over
00:06:13over $31 trillion in total. That's That's likely to push up mortgage
00:06:16mortgage rates in the US and make make borrowing more expensive for
00:06:19for businesses. Now, all of this this at a time when the when we are
00:06:22are expecting Fed Chair Kevin Warsh Warsh to raise US. Interest rates
00:06:26rates this week as prices across across the US continue to rise. Let's
00:06:29Let's talk now to Bob Parker, who's
00:06:31who's senior adviser at Icma Asset Asset Management and Investors. Bob,
00:06:35Bob, good to have you here. Why does
00:06:37does this matter? It matters for
00:06:40for a variety of reasons. And you
00:06:43you know, linking back to your conversation
00:06:46conversation earlier about pensions, pensions, let's not forget that in
00:06:49in the UK, you know, the cost of
00:06:52of interest debt in the gilt market,
00:06:53market, the cost to the government government is over £100 billion this
00:06:57this year. In you know, the situation
00:07:00situation in America is even more
00:07:02more worrying where interest costs
00:07:04costs are the second largest item
00:07:06item in the American budget and will
00:07:09will exceed 1 trillion. So the higher
00:07:11higher bond yields go and bond yields
00:07:14yields are going higher because of of what's going on in. As you mentioned
00:07:18mentioned in energy markets. And
00:07:19And that feeds into higher inflationary
00:07:22inflationary expectations. And central central banks have to respond to
00:07:26to that by raising interest rates rates with The Fed probably raising
00:07:29raising rates tomorrow. Bank of England England not necessarily raising rates
00:07:33rates this week but certainly in
00:07:36in October or later in the year.
00:07:38year. And the ECB has has raised
00:07:41raised rates twice already. So higher
00:07:44higher costs for consumers, higher higher costs for businesses. And
00:07:47And as bond yields go higher, we
00:07:50we have this sort of catch 22 this
00:07:53this vicious circle in dealing with
00:07:55with budget pressures. Yes. And quite quite clearly that will be thrown
00:07:58thrown into focus when we hear the the budget here in the UK. But particularly, particularly, of course, the politics
00:08:02politics and the economics will come come crashing together, won't they?
00:08:05they? Not least in the US for the the mid-term elections and for President
00:08:09President Trump, the cost of borrowing borrowing going the wrong way. Absolutely.
00:08:13Absolutely. And you know, the opinion opinion polls for the mid-term elections
00:08:17elections are not positive for the
00:08:19the Republicans. And, you know, another another factor which I think does
00:08:22does worry investors is that if the
00:08:27the Republicans lose control of the
00:08:29the lower the House, then we could
00:08:31could end up with a policy gridlock
00:08:34gridlock in America. And, you know,
00:08:35know, when that has happened in the
00:08:38the past, we have had, you know, know, increased volatility in bond
00:08:41bond markets. So it's not just the
00:08:45the problem of upward pressure on
00:08:46on bond yields. Investors face the
00:08:49the challenge of increased volatility, volatility, which in turn means that
00:08:52that they adopt much more cautious
00:08:55cautious positions in terms of their their asset allocation. Bob, we will
00:08:58will talk again about this, but I I know you'll be keeping a close close eye on it as well. Thank you,
00:09:02you, Bob Parker. Thank you. A thanks.
00:09:06thanks. Europe's biggest names in in transport and energy are joining
00:09:09joining forces in a major push to to bring hydrogen powered heavy trucks
00:09:12trucks onto the road by 2030. A host
00:09:14host of companies, including Volvo Volvo Daimler Truck, Toyota and TotalEnergies
00:09:18TotalEnergies say the technology technology is ready, but the ecosystem
00:09:22ecosystem around it isn't. Now, for for the first time, they're co-ordinating
00:09:25co-ordinating fleets, fuel stations stations and hydrogen supply into
00:09:28into a single plan. Full details details of the programme will be
00:09:31be announced by the bosses at the the IAA Transportation event that's
00:09:34that's getting under way in Hannover
00:09:37Hannover as Julia Caesar now reports. reports. Heavy duty transport is
00:09:40is one of Europe's biggest remaining remaining sources of emissions. Hydrogen
00:09:44Hydrogen has long been seen as a a promising solution for long haul,
00:09:47haul, heavy duty transport, but progress
00:09:50progress has been slow. Without a
00:09:53a co-ordinated ecosystem, Europe
00:09:56Europe has about 6.5 million diesel diesel trucks producing a quarter
00:10:00quarter of all road transport emissions.
00:10:02emissions. Stand by any busy road road like this one and you can feel
00:10:06feel the noise and pollution that that they create while switching
00:10:09switching heavy trucks to hydrogen
00:10:12hydrogen would mean zero tailpipe
00:10:15tailpipe emissions, quieter roads roads and cleaner long haul freight
00:10:19freight where batteries fall short. short. The initiative aims to make
00:10:22make hydrogen trucks commercially commercially viable. That means tackling
00:10:26tackling one of the biggest barriers barriers to adoption the total cost
00:10:29cost of ownership. During the coming
00:10:32coming 5 to 10 years, we. Our anticipation anticipation is that we will start
00:10:36start to see the scaling. But again, again, we will only see it if we
00:10:39we are working together in the ecosystem. ecosystem. And that's the reason
00:10:42reason why a coming together between between different actors in the ecosystem
00:10:45ecosystem is so important because because we think that the business
00:10:49business case, the technology is is there and now it's about really
00:10:52really to make sure that we are putting
00:10:56putting also the right conditions conditions to provide business models
00:10:59models for scaling. The plan includes
00:11:02includes strategically placed refuelling refuelling corridors along key transport
00:11:06transport routes designed to give give operators confidence that hydrogen
00:11:10hydrogen will be available where where and when they need it. This
00:11:13This is a teamwork between private private and public to make it happen.
00:11:17happen. But again, we believe and
00:11:18and we have seen that also that countries
00:11:21countries and regions that are driving
00:11:23driving this agenda can combine competitiveness
00:11:29competitiveness resilience or energy
00:11:30energy resilience. So to speak. Regional
00:11:34Regional security and also competitiveness competitiveness and eventually, which
00:11:38which is super important decarbonisation, decarbonisation, less pollution and
00:11:40and less noise when it comes to mobility.
00:11:43mobility. Hydrogen offers fast refuelling, refuelling, high energy density and
00:11:46and the ability to keep freight moving moving without adding huge battery
00:11:50battery packs. Experts say that shifting
00:11:54shifting these trucks to hydrogen hydrogen is essential if Europe's
00:11:58Europe's going to meet its climate
00:12:01climate targets. Europe's transport transport sector is preparing for
00:12:04for a hydrogen powered future and
00:12:06and the race to build it has officially
00:12:09officially begun. Julia Caesar. BBC
00:12:12BBC News. Some of the other business business stories we're following
00:12:15following for you and a plan to nationalise nationalise the UK's third largest
00:12:18largest steelworks is being developed developed by the government. The The Business Secretary, Jonathan
00:12:21Jonathan Reynolds, said ministers ministers were looking to acquire
00:12:24acquire Speciality Steel UK that that has sites in South Yorkshire Yorkshire and the West Midlands.
00:12:28Midlands. The government initially initially took control of the firm firm last year after it was forced
00:12:32forced to liquidate by the High Court. Court. Alcohol buyers in the UK will
00:12:36will be able to use a digital ID ID app on their phones to prove their
00:12:39their age. Under new rules, pubs pubs and shops in England and Wales
00:12:42Wales can use the tech in addition addition to current physical forms
00:12:45forms of ID, with the government government saying a digital option
00:12:47option will make age checks quicker quicker and more secure for customers
00:12:51customers and staff. More on all
00:12:54all those stories for you right now. now. Bbc.com/business. But that is
00:12:58is your Business Today. See you soon.
00:13:08soon. MUSIC
00:14:22Martin Sharkey of Tech, now on BBC
00:14:23BBC News. The BBC was always on in
00:14:31in the Missouri house and my dream dream actually was to be a BBC News
00:14:34News presenter. I want to be for
00:14:37for others what the BBC was for us
00:14:39us a trusted source of stability
00:14:41stability and hope. For me, trust
00:14:44trust is about presence, about fostering fostering relationships all around
00:14:47around the world over years. So when when a story breaks, we're not chasing
00:14:51chasing a lead. We're already there.
00:14:54there. I'm Maryam Moshiri on the
00:14:56the World Today for BBC News.
00:15:09Welcome back. You are with BBC
00:15:10News. I'm Kasia Madera the rapper
00:15:14rapper Macklemore has been dropped
00:15:15dropped from Ed Sheeran's US tour
00:15:18tour after making pro-Palestinian pro-Palestinian comments on stage. stage. The artist was criticised
00:15:22criticised by Jewish groups after
00:15:24after saying Free Palestine at two two concerts and making political
00:15:28political speeches. Macklemore stood stood by his comments, saying in
00:15:30in a statement that the real victims victims are the Palestinian people
00:15:34people in Gaza. Writing on Instagram, Instagram, he said anti-Semitism
00:15:37anti-Semitism is real and what is is exact and that is exactly why
00:15:40why the word matters too much to
00:15:42to be used as a shield against criticism
00:15:46criticism of the Israeli state when
00:15:48when criticising Israel opposing opposing Zionism or saying Free Palestine
00:15:52Palestine gets conflated with hatred
00:15:53hatred of Jewish people. It doesn't
00:15:56doesn't protect Jewish people. It It protects Israel from accountability. accountability. Well,