Unemployment in Britain rises to 5% - Recorded the highest level in the last four years
Unemployment in the United Kingdom has risen more than expected, reaching its highest level in four years, official data showed on Monday. It comes at a time of significant job market slowdown ahead of Chancellor Rachel Reeves's autumn budget.
Less than three weeks ahead of its tax and public spending statement, data from the Office for National Statistics shows the unemployment rate rose to 5.0% in the three months to the end of September, from 4.8% in the previous quarter.
Economists had forecast a milder increase of 4.9%. This represents a number of 1.8 million unemployed people, the highest rate recorded since January 2021, at the height of the COVID-19 pandemic.
According to experts, "these figures show that the British labor market is experiencing uncertainty ahead of the budget, while businesses, already weakened by the increase in national insurance in April, are holding back hiring in anticipation of an austerity budget."
These concerns about the weakening job market could prompt the Bank of England to cut interest rates as early as next month. Last week, the institution left its key rates unchanged but signaled the possibility of a cut in December as inflation appears to have peaked and the economy is slowing.
The central bank expects unemployment to rise above 5% next year, a development that could ease inflationary pressures by making it harder to demand higher wages and stopping businesses from raising prices. However, anecdotal data suggests the labor market has already cooled significantly, with employers grappling with rising taxes, persistent inflation, high borrowing costs and a weak economic outlook.
The number of people on company payrolls fell by 180,000 in the year to October, according to figures. In the budget due to be presented on 26 November, Reeves is expected to raise taxes to cover a deficit in public finances estimated at up to 30 billion pounds. However, economists have warned that such a move could damage jobs and economic growth.
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