UK unemployment hits highest since 2021

With businesses facing a UK tax hike and US tariffs, official data released Tuesday revealed that Britain's jobless rate has risen to its highest level since August 2021.

According to a statement from the Office for National Statistics, the rate increased to 4.5 percent in the first quarter.

The ONS also noted that this was in contrast to 4.4 percent for the three months ending in the end of February.

The report from Tuesday covers the time frame prior to April's implementation of a corporate tax increase outlined in the October first budget of the Labour government.

Additionally, it comes before US President Donald Trump placed a basic 10-percent tariff on the UK and other nations last month.

"The number of employees on payroll decreased in the first quarter of the year, indicating that the (UK) labour market is still cooling," said Liz McKeown, director of economic statistics for the ONS.

“Wage growth slowed slightly in the latest period but remains relatively strong, with public and private sectors… showing little difference,” she added.
Analysts said the data would likely see the Bank of England cut its key interest rate a further two times this year, having reduced borrowing costs twice already in 2025.

“While the jobs market weakened further, this isn’t feeding through to a marked easing in pay growth,” noted Ruth Gregory, deputy chief UK economist at Capital Economics.

“That will probably keep the Bank of England cutting interest rates at the current pace of once every quarter.”

She added that “further softening in employment in April suggests businesses continued to respond to the rise in business taxes and the minimum wage by reducing headcount”.