Chancellor Rachel Reeves is walking a fiscal tight rope. The state pension triple lock may tip her over.

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Rising inflation could force Rachel Reeves into a difficult triple lock decision (Image: Getty)

Pensioners love the triple lock. It’s lifted millions out of poverty since 2011.

It did this by lifting the state pension each year by earnings, inflation or 2.5%, whichever is highest.

State pensioners bumper got bumper pay hikes of 11.1% in 2023 and 8.5% last year. That lifted today’s new state pension to a maximum £11,502 a year.

Pensioners will get an inflation-busting 4.1% hike to £11,973 in April.

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Experts were predicting a more modest triple lock increase in 2026, as inflation and wage growth eased. Then last week the Bank of England (BoE) put a spanner in the works.

It warned consumer price inflation (CPI) is about to start climbing again. BoE forecasters reckon it will hit 3.7% later in the summer.

That’s a nightmare for Reeves. Why? It means she has to find another £1.3billion to fund the higher triple lock increase and balance the national books.

The Chancellor is already running out of fiscal headroom. It’s now shrunk to just £3billion. The higher triple lock will squeeze that further.

Treasury number crunchers hate the triple lock. They would love to kill it off. So would Reeves. Labour may have pledged to maintain the mechanism this Parliament, but only under voter duress.

Plenty of Tories hate it too. But none are brave enough to axe it. They want the other party to get the blame.

It’s like a game of pass the parcel bomb.

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Given the dire trajectory of the UK’s finances, Reeves could be the one who ends up holding it.

Millions of pensioners already loathe her for scrapping their Winter Fuel Payment. Axing the triple lock would be far more politically explosive.

If inflation does hit 3.7% in September, that would give pensioners another £443 in April 2026 (or more if wages are higher than that).

That would lift the full new state pension to £12,416 a year.

Combined, the 2025 and 2026 triple lock increases will boost the new state pension by £915, in a double blow for Reeves and Labour.

It gets worse.

As inflation climbs, economic growth has slumped.

At the same time as lifting its inflation forecasts, the BoE slashed its 2025 growth forecasts in half.

That’s down to Reeves. She killed growth by threatening huge tax hikes. That’s the last thing we need, as the ageing population makes the state pension ever more expensive.

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The Adam Smith Institute think tank reckons the triple lock will become fiscally unsustainable by 2035. With Reeves trashing the economy, that day could arrive much sooner.

The Chancellor prides herself on taking “difficult decisions.” That’s what she promised us in last October’s Budget, and she certainly delivered.

Unfortunately her decisions weren’t just difficult. They were wrong.

Axing the triple lock may be a difficult decision too far for the Chancellor. She’ll face the wrath of pensioners who feel cheated by her for the second time.

She’d love to pass this parcel bomb to someone else. Too late. Thanks to her disastrous handling of the economy, it’s likely to blow up in her face.

Some may see that as poetic justice. Pensioners won’t. They’ll be the ones to suffer