The United Kingdom's unemployment rate has surged to its highest level in nearly four years, reaching 4.6% in the three months ending in April 2025, according to the latest data from the Office for National Statistics (ONS).
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The figures, released on Tuesday, reflect a notable increase from the 4.5% reported in the previous quarter. Analysts attribute the rise to a series of economic disruptions, including a business tax hike introduced by the Labour government and a new 10% U.S. tariff on UK exports under President Donald Trump.
“There continues to be weakening in the labour market, with the number of people on payroll falling notably,” said Liz McKeown, Director of Economic Statistics at the ONS.
“Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.”
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This marks the highest unemployment level since July 2021, raising alarms among policymakers and economists. The impact is being felt across industries, particularly in manufacturing and exports.
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, commented on the potential implications for monetary policy: “With payrolls falling, the unemployment rate climbing, and wage growth easing, today’s labour market release leaves us more confident in our view that the Bank of England will cut interest rates further than investors expect, to 3.50% next year.”
The Bank of England last reduced its benchmark interest rate by 0.25% in May, bringing it to 4.25%. With inflation showing signs of easing, more rate cuts are anticipated to stimulate economic activity.
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Meanwhile, wage growth has also slowed, suggesting that both consumer spending and business investments may take further hits if employment challenges persist.
The government has yet to announce new relief measures to support businesses or mitigate job losses. Economists warn that without targeted interventions, the unemployment trend could continue to rise into the second half of 2025.
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