UK unemployment rises amid fall in payroll jobs and business concerns
UK unemployment rises amid fall in payroll jobs and business concerns
More than a quarter of a million jobs have been lost in the UK since the autumn budget, according to new figures published by HM Revenue and Customs, as unemployment rises to its highest level in nearly four years. The data, reported by The Guardian, shows a fall of 109,000 in payroll employment in May alone — the sharpest monthly drop since the first COVID-19 lockdown in 2020.
The total number of jobs lost since the budget now stands at approximately 276,000. Business groups have linked the job losses to changes in employer National Insurance contributions (NICs), which increased by £25 billion from April and affected over one million businesses. Combined with high borrowing costs and global trade uncertainty, including tensions related to U.S. trade policies, many companies are reportedly struggling to maintain staffing levels.
Figures from the Office for National Statistics (ONS) show that the UK’s unemployment rate rose to 4.6% in the three months to April, up from 4.5% previously, marking the highest rate since mid-2021. Wage growth also slowed, with annual regular pay increases easing to 5.2%, falling short of economists’ expectations.
Although questions remain about the reliability of the ONS’s Labour Force Survey due to declining response rates, economists agree that labour market conditions are weakening. The number of job vacancies fell by 63,000 in the three months to May, further indicating reduced hiring activity. Businesses in lower-paid sectors such as hospitality, retail, and leisure had previously warned that higher costs might lead to staffing cuts.
Economic analysts have described the situation as a challenging period for the UK labour market, with the possibility of further job losses if additional tax increases are introduced later in the year.
While economic inactivity rates have slightly declined to 21.3%, concerns remain over employment trends.
According to The Guardian’s report, the Bank of England is closely monitoring labour market developments as it considers future interest rate adjustments. Following the release of the data, the pound fell 0.5% against the US dollar. Further rate cuts are being considered as policymakers assess the broader economic outlook.
