UK unemployment hits 4-year high
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The news: UK unemployment rose to a four-year high in the lead up to increases in payroll taxes and minimum wage in April, highlighting strains in the country’s labour market.
The numbers: On Tuesday, data from the UK’s Office for National Statistics (ONS) showed that payrolled staff were reduced by 55,000 workers between March and April this year, leaving headcount 0.4% lower than in April the year prior.
Provisional figures for May, which are expected to be revised upwards, showed a month-on-month drop in payrolls of 109,000. The figure is more severe than the 20,000 decrease expected by economists.
The unemployment rate, according to the ONS survey, edged up to 4.6%, a four-year high, up from 4.5% in the three months to March.
The context: The largest contractions in payroll numbers were felt in sectors most exposed to the new policy moves introduced by Chancellor Rachel Reeves’ budget policies, including retail and hospitality.
The figures have fuelled speculation that the Bank of England will continue easing interest rates, with traders now pricing in one rate cut by September, with a second cut by the end of the year.
The numbers push the total number of jobs lost since Reeves’ budget in October 2024 to 276,000.
Meanwhile, the latest report from the British Retail Consortium and KPMG showed that May retail sales in the UK rose just 1% year-on-year, the slowest growth in 2025 so far as consumers trim their spending.
The sources: Office for National Statistics, British Retail Consortium & KPMG, FT
