Britain’s unemployment rate has climbed to its highest level since July 2021, reaching 4.6 per cent in the three months to April, according to official data released Tuesday by the Office for National Statistics.
The figure marks an increase from 4.5 per cent recorded in the first quarter of 2024.
The labour market downturn coincides with two major economic headwinds: a business tax increase implemented under the Labour government’s October 2023 budget and new 10 per cent baseline tariffs imposed by the United States on United Kingdom exports starting April 2024.
ONS Director of Economic Statistics Liz McKeown noted concerning trends: “There continues to be weakening in the labour market, with the number of people on payroll falling notably. Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.”
Additional pressure came from slowing wage growth, prompting analysts to predict extended monetary easing by the Bank of England. Capital Economics’ Deputy Chief UK Economist Ruth Gregory stated: “With payrolls falling, the unemployment rate climbing and wage growth easing, today’s labour market release leaves us more confident in our view that the Bank of England will cut interest rates further than investors expect, to 3.50 per cent next year.”
The central bank had begun its easing cycle with a 25-basis-point cut in May 2024, reducing rates to 4.25 per cent. Financial markets reacted to Tuesday’s data with sterling weakening while London’s FTSE 100 index gained ground in early trading.
The dual shocks of domestic fiscal policy changes and international trade measures appear to be reshaping Britain’s employment landscape, with businesses showing increased caution about hiring amid the economic uncertainty.
