After Inflation Jump, UK Sees Highest Unemployment Since 2021
The UK’s unemployment rate has climbed to its highest level since mid-2021, according to fresh data from the Office for National Statistics — less than three weeks after it was revealed that inflation rose to 3.5% in April, the highest rate in over a year.
In a setback for Chancellor Rachel Reeves ahead of Wednesday’s spending review, the ONS said unemployment hit 4.6% in the three months to April, up from 4.5%. That modest rise masks a deeper weakness: payroll numbers dropped by 109,000 in May — the sharpest monthly fall since the early days of the Covid pandemic.
The figures follow April’s £25bn hike in employer national insurance contributions and a 6.7% rise in the national living wage, both of which pushed up costs for nearly a million UK businesses.
“This suggests the UK’s jobs market took a damaging hit from ‘Awful April’, with the tough reality of sharply rising NICs and national living wage costs pushing more employers to cut staff,” said Suren Thiru of the Institute of Chartered Accountants.
Vacancies also fell by 63,000 over the quarter. Hospitality, retail and leisure sectors — already under pressure — are among the hardest hit.
ONS director Liz McKeown said employers were showing signs of caution, with feedback indicating many are “holding back from recruiting new workers or replacing people when they move on.”
The data puts added pressure on the Bank of England as it weighs whether to cut interest rates further. With inflation climbing and job losses mounting, policymakers are treading a fine line.
