The UK government has pledged that pensioners will not be forced to pay income tax on the full new state pension, after wage growth figures paved the way for a triple lock rise that pushes the payment above the frozen personal tax allowance. Official data showed average wages rose 3.9% in the three months to July, meaning the state pension is set to increase by the same percentage from next April, taking it above £13,000 a year for the first time. The move heads off a potential backlash but adds pressure on chancellor John Healey ahead of next month's budget, as the pensions minister confirmed further details on how the commitment will be delivered are still to come.

The full new state pension will rise from £241.30 a week (about £12,500 a year) to £250.70 a week (about £13,000 a year), while the old basic state pension will rise to £192.10 a week (about £9,990 a year) for the two-thirds of pensioners who qualified before April 2016. This exceeds the frozen £12,570 personal tax allowance, which would otherwise have meant new pensioners paying tax for the first time. Separately, the wider labour market showed signs of cooling: unemployment held steady at 4.9%, payroll numbers continued edging down, and job vacancies fell to 702,000. The Bank of England is expected to hold interest rates at 3.75% on Thursday, weighing the softer jobs data against rising oil prices, which have climbed above $107 a barrel amid the Middle East conflict.