It’s time to scrap the triple lock Top of the charts 12 June 2026 Mike Brewer Morning all, No need to worry that the recent rash of Westminster resignations has reached the Resolution Foundation: I’m filling in for Ruth, but she will be back next week. Last time I filled in I brought you insights on AI and Manchesterism, and those stories are still very much with us. In fact, this week we’re considering a lot of slow-burning questions which could come to a head soon. Who should (and who will) capture the gains from AI? Should the state own more of our services? And is the triple lock finally running out of road? Below you’ll find reads on all three, plus a look ahead to Thursday’s MPC decision. Have a great weekend, Mike Deputy Chief Executive Resolution Foundation Counting AI’s cost. The idea of a “job centre in your pocket” got some coverage this week, but the launch of the AI Economics Institute (AIEI) also deserves attention. It’s a Treasury-DSIT joint venture, helmed by Professor Simon Johnson, which aims to answer questions on the economic opportunities and risks presented by AI. But this interesting Substack argues that too many people are fixating on the wrong question. Counting “exposed” jobs doesn’t tell us what might happen next. Instead, we should follow the money – and it’ not heading into Treasury coffers. The gains from AI-boosted productivity could well flow to US tech giants rather than British workers or the Exchequer, leaving us poorer just as the need to invest in adjustment becomes greater. Talk about a vicious circle. The author puts the gap between the best- and worst-case fiscal scenarios at over £100 billion. That number ought to focus minds at the AIEI from day one. Long odds. There’s a natural experiment underway across the pond. A federal ban on sports betting was struck down by the Supreme Court in 2018, and since then the industry has grown from roughly $5 billion wagered to over $121 billion in 2023. This paper asks how that change has impacted food sufficiency (defined as having enough to eat in the previous week), and… it hasn’t gone well. The researchers find that legalised sports gambling reduces food sufficiency by 2.1 per cent among working-age adults without a college degree, with non-white adults seeing a 4.6 per cent decline. The average gambler loses $275 over a quarter, but the damage concentrates in married households, suggesting one person’s gambling habit quietly empties the fridge for others. Across nine states, that makes for 284,000 food-insufficient households, costing as much as $130 million in excess healthcare spending annually. The house always wins. (Re-)Owning it. Is nationalisation making a comeback? Economic historian Nicholas Mulder thinks so – and on the IMF podcast he explains why that’s not automatically good or bad news. From German energy to British rail, governments are reasserting control over key industries, with Andy Burnham pushing for more. But Mulder’s focus is less on ownership than oversight. Norway made state oil work through democratic accountability, but Congo, Jamaica and Chile’s spree of nationalisations arguably tipped them into debt crises. In a world of supply shocks and geopolitical turbulence, more state intervention is probably inevitable; the real question is whether governments have the institutions to make it stick. Bending, not breaking. Against all expectations, American healthcare spending has not gone (more) stratospheric in recent years. This paper asks whether Americans are finally slowing the upwards curve of medical spending. Earlier forecasts failed to predict this historic healthcare spending slowdown, expecting it to grow from 17 per cent of GDP in 2010 to 21 per cent in 2024. Instead, it rose to just 18 per cent (it was 11 per cent in the UK). The authors argue this is partly down to technology, estimating that new innovations account for about a fifth of the undershoot. They conclude that, even though the cost curve has been bent, it is not nearly enough: the US still spends more than any other country on healthcare, in exchange for poor health outcomes that don’t justify the price. Something for the weekend | The road to Wigan Pier No. 10 Next Thursday the voters of Makerfield decide whether to send Andy Burnham back to Westminster, possibly kicking off a contest for the keys to Number 10. But whoever’s running the show this autumn will face an unforgiving in-tray, with next week’s economic data giving us a sense of the dangers ahead. Inflation: CPI was running at 2.8 per cent in April, but you can expect a jump in May’s data, announced next Wednesday: the Bank of England are predicting a target-busting 3.3 per cent. Meanwhile, Ofgem has confirmed the energy price cap will rise to £1,862 in July, so continued cost of living pressure is all but guaranteed. Labour market: Pay is limping rather than racing ahead of prices: average weekly earnings were up just 0.1 per cent in real terms for the first quarter of this year, while unemployment has ticked up to 5.0 per cent, and NEET rates are rising for the young. Next week we’ll find out if real wage growth goes negative again for the first time since May 2023. Interest rates: Faced with rising prices but cooling wage growth, the Bank of England has a tricky call to make at its Monetary Policy Committee meeting on Thursday, with the headline rate currently sitting at 3.75 per cent. And those pesky 10-year gilt yields are still close to 5 per cent, putting that all-important fiscal headroom in danger. Chart of the week It’s time to say the quiet part out loud. The UK can no longer afford the triple lock, a policy that is poorly designed, less effective than hoped, and actively harmful to the nation’s long term economic health. Continuing to prioritise pensioner incomes over those of working-age adults and children makes little sense given that pensioners were already the least likely to be in poverty before the triple lock was introduced. And nearly half of the projected growth in social security spending by the end of the decade comes from the State Pension. There is, however, a more sustainable path. For Chart of the week, we consider alternative uprating mechanisms and what they would have meant for pension values. A smoothed earnings link (the dotted blue line) – still a much more generous deal than for working-age benefits – would have left the state pension £12.30 per week higher in real terms in 2026-27 than in 2011-12. The time has come to move away from an arbitrary ratchet that makes it a hostage to economic volatility.
