Britain’s unemployment rate has risen to its highest point in nearly four years, reaching 4.6 per cent in the three months leading up to April, according to data released on Tuesday by the Office for National Statistics.
The increase from 4.5 per cent in the first quarter of the year reflects growing pressure on businesses amid a combination of domestic tax increases and new international trade barriers.
The latest figures marked the highest unemployment level since July 2021 and came in the wake of economic policy changes, including a rise in business taxes introduced in the Labour government’s first budget last October.
The impact has been compounded by a 10 per cent tariff on UK exports, imposed by United States President Donald Trump in April, which has added further strain on the manufacturing and export sectors.
‘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’, said the Director of Economic Statistics, Liz McKeown, at the ONS.
The data also showed a slowing pace of wage growth, a trend analysts said could influence the Bank of England’s monetary policy decisions in the coming months.
With inflation cooling and economic activity softening, the central bank is expected to continue easing interest rates into next year.
‘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’, said Deputy Chief UK Economist at Capital Economics, Ruth Gregory.
The Bank of England last lowered its benchmark interest rate in May by 0.25 percentage points to 4.25 per cent.
