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Unemployment in the United Kingdom has risen to its highest level since August 2021, according to official data released on Tuesday. The unemployment rate climbed to 4.5 percent in the first quarter, up from 4.4 percent in the three months leading to the end of February, the Office for National Statistics (ONS) reported.
The latest data covers the period before April’s increase in business tax, which was introduced in the Labour government’s first budget last October. It also precedes the baseline 10 percent tariff imposed on the UK and other nations by US President Donald Trump last month.
“The broader trend shows the UK labour market cooling, with the number of employees on payroll declining in the first quarter of the year,” said Liz McKeown, ONS director of economic statistics.
“Wage growth has slowed slightly but remains relatively strong, with little difference between the public and private sectors,” she added.
Economists suggested that the data could prompt the Bank of England to reduce its key interest rate by a further two times this year, having already made two rate cuts in 2025.
“Although the jobs market weakened further, this isn’t translating into a significant slowdown in wage growth,” said Ruth Gregory, deputy chief UK economist at Capital Economics.
She added that the continued softening of employment in April suggests businesses are responding to the rising business taxes and the minimum wage by reducing their workforce.
