Drop in VocaLink Take Home Pay Index Growth Puts Pressure on Christmas Sales

Pay Growth Drops off Slightly in November to 1.4 Per Cent After Remaining Steady at 1.7 Per Cent in the Two Previous Months

LONDON, December 9 - The VocaLink Take Home Pay Index showed a weakness in pay growth as it
fell to 1.4 per cent in November after remaining steady in the two previous
months at 1.7 per cent. The continued fragility in the state of the economy,
combined with poor prospects in the near-to medium-term, point towards
ongoing slack in the labour market and a corresponding weakness in pay
growth.

The reason for the fall can be attributed to the services sector. The
VocaLink services index fell for the third consecutive month to reach 0.9 per
cent pay growth in November. This is half of the value seen in October and
significantly lower than the recent peak of 2.8 per cent achieved in August.
The services index now stands at its all time lowest level and falls below
the manufacturing index for the first time since June. The figures firmly
dispel any notion of a robust or rapid economic recovery and will lead to
increased caution about discretionary pay on the part of service sector
firms.

In contrast, take home pay growth in the manufacturing sector increased
in November for the fourth consecutive month. It has risen from its all time
low of 0.5 per cent in July to reach 2.0 per cent in November. Much of this
improvement can be attributed to the pick-up in manufacturing production as
the inventory cycle started to turn. However, the implication remains that
without strong growth prospects ahead, the boost from the inventory bounce
will not be sufficient for sustainable improvements in pay growth.

Mark Chapman, marketing director at VocaLink, said: "Although retail
sales were up slightly in October, the decline in November's take home pay
growth may well affect consumer spending as Christmas approaches. With the
reversal of the VAT cut due in January, continuing weak pay growth and lack
of credit availability retailers look set for a challenging year in 2010."

Douglas McWilliams, chief executive of economics consultancy cebr, said:
"Though we may see some short periods of higher or lower wage growth, overall
the trend will remain at this lower level. As a result, we expect the Bank of
England to continue its unprecedented monetary easing policy by keeping rates
at the current level into 2011."

VocaLink processes over 90 per cent of UK salaries and the VocaLink Take
Home Pay Index, established in 2004, provides the most timely and accurate
disposable income data available in the UK. It is based on actual payments
made to employees on a three-month moving average compared with the same
Continuation measure a year earlier. It is affected by changes in tax rates,
National Insurance and other employer payments or deductions.

Note to editors:

The VocaLink Take Home Pay Index is an important aspect of the UK's
economic performance and one of the components that drives the Bank of
England's Monetary Policy Committee's (MPC) interest rate policy due to be
announced on Thursday 10 December 2009.

Follow this link to read the full report, available from 09 December 2009

bit.ly/tsJyX

Methodological notes

The average payment per employee is estimated from the total value of
payments and the number of transactions and then expressed as an index for
each month. The data uses a 3-month moving average to mitigate seasonal
variations and looks at the year on year increase to provide a fair economic
indicator that is also comparable with other data.

While the FTSE 350 sample is largely representative of the corporate
economy in the UK, when comparing the VocaLink take home pay index data with,
for example, government statistics, it is important to take into account the
fact that some trends, which affect relatively larger firms differently, may
have a disproportionate impact on the VocaLink take home pay index compared
with the government's official Average Earnings Index (AEI). For example, the
VocaLink index does not include the public sector so when pay trends in the
public sector are different from those in the private sector, this will
affect the VocaLink index differently from the AEI.

The VocaLink Take Home Pay Index is based on take home pay data. It is
therefore affected by changes in tax rates, changes in National Insurance
contribution rates and changes in other employer payments or deductions. It
is therefore a more representative indicator of disposable income for salary
earners than data that does not take this into account.

    The VocaLink take home pay index series

    Three month average annual change

    Year             2008                       2009
    Month         Nov Dec Jan    Feb Mar Apr May Jun Jul Aug Sep Oct Nov

                  %   %   %      %   %   %   %   %   %   %   %   %   %
    VocaLink Take
    Home Pay
    Index         3.5 2.9 2.7    2.4 2.0 1.6 1.1 1.3 1.3 2.0 1.7 1.7 1.4
    VocaLink
    Manufacturing
    Index         2.3 2.4 1.4    1.5 1.2 1.4 1.1 1.3 0.5 0.8 0.9 1.5 2.0
    VocaLink
    Services      3.9 3.0 3.1    2.9 2.4 1.7 1.0 1.2 1.9 2.8 2.1 1.8 0.9
    Index

About the VocaLink Take Home Pay Index

The VocaLink Take Home Pay Index tracks monthly take home pay levels in
the UK. VocaLink is the processor for automated payments in the UK on behalf
of Bacs, the UK body responsible for clearing and settlement. This includes
all Direct Debit and Bacs Direct Credits, which account for over 90% of
salary payments delivered into employees' bank accounts. The VocaLink Take
Home Pay Index is compiled using the data captured from the salary payments
of 100 of the FTSE 350 companies.

VocaLink works with the centre for economics and business research (cebr)
to deliver the analysis of this powerful and timely indicator of take home
pay inflation to economists, analysts and the media. It is an important
aspect of the UK's economic performance and one of the components that drives
the Bank of England's Monetary Policy Committee's (MPC) interest rate policy.
The VocaLink Take Home Pay Index is also split by broad sector group into two
sub-indices - the VocaLink Industry Index and the VocaLink Services Index.

About VocaLink

VocaLink is a specialist provider of transaction services to banks, their
corporate customers and Government departments. It processes domestic and
international automated payments and provides ATM switching solutions. On a
peak day, the VocaLink automated payment platform processes over 90 million
transactions and over half a billion in a month. Its switching platform
connects the world's busiest ATM network of over 60,000 ATMs. Its Real-Time
Payments platform provides the central infrastructure for the UK Faster
Payments service. VocaLink is working with BGC (Bankgirocentralen) to provide
outsourced processing for the majority of Sweden's domestic payments.

Having pioneered electronic payments over 40 years ago, many of the
world's top banks and their corporate customers have grown to rely on
VocaLink to meet their transaction needs. Its processing services offer banks
reach throughout the Single Euro Payments Area (SEPA) and beyond; and are
complemented by value-added services that leverage industry expertise and
technical capabilities.

Please visit www.vocalink.com for more information

About cebr

Centre for Economics and Business Research ltd is an independent
consultancy with a reputation for sound business advice based on thorough and
insightful research.

Since 1992, cebr has been at the forefront of business and public
interest research. Providing analysis, forecasts and strategic advice to
major UK and multinational companies, financial institutions, government
departments and agencies, trade bodies and the European Commission.

Cebr is recognised as one of the country's leading independent
commentators on economics and business trends. Its forecasts are used by a
diverse audience of business people, policy makers and journalists; even the
Treasury publishes its predictions for the UK economy.

For further information, please contact: Suzanne Hewitt, Hotwire, +44(0)20-7608-2500 or vocalinkuk at hotwirepr.com; Deborah Souter, VocaLink Limited, +44(0)870-920-8651 or deborah.souter at VocaLink.com. If you would like to receive the monthly press release please e-mail vocalinkuk at hotwirepr.com or deborah.souter at VocaLink.com