Britain’s unemployment rate has reached its highest point since August 2021, according to official data released on Tuesday. The unemployment rate climbed to 4.5% in the first quarter, up from 4.4% in the three months leading to February, as reported by the Office for National Statistics (ONS).
The data released covers the period before the UK government introduced a hike in business tax in April, as part of Labour’s maiden budget outlined in October. It also precedes the 10% tariff imposed on the UK and other countries by former US President Donald Trump last month.
“The broader picture continues to reflect a cooling labour market, with the number of employees on payroll falling during the first quarter of the year,” said Liz McKeown, Director of Economic Statistics at the ONS. “Wage growth has slowed slightly but remains relatively strong, with no significant difference between the public and private sectors.”
Analysts suggest that this data could prompt the Bank of England to reduce its key interest rate further this year, following two interest rate cuts already made in 2025.
“While the jobs market continues to weaken, this is not leading to a significant slowdown in pay growth,” said Ruth Gregory, Deputy Chief UK Economist at Capital Economics. “This will likely keep the Bank of England on track to cut rates once every quarter.”
Gregory further noted that “the continued softening of employment in April suggests businesses are responding to the increase in business taxes and the rising minimum wage by cutting their workforce.”
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