According to latest data from the Office for National Statistics (ONS), in the three months to March unemployment has jumped from 4.5% from 4.4% the month before.
The ONS also reported that in the same period average regular earnings fell to 5.6%, but after taking into account the Consumer Prices Index (CPI) inflation earning stands at 2.6% higher.
Experts are warning that unemployment has increased due to the Chancellor’s Autumn Budget in 2024 as Rachel Reeves announced an increase in employers’ national insurance contributions, which has seen businesses freeze pay rises and employment, and many more are planning redundancies in the coming months.
From 1 April businesses NIC soared 15% due to the Chancellor’s tax raid including the rise in the minimum wage.
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Professor Joe Nellis, an economic adviser to accountancy firm MHA, said, “The UK labour market continues to be tight, reflected by a period of relatively low unemployment and consistently high earnings growth an earnings growth figure of 5.6% means that wage rises stay considerably above inflation as demand for labour pushes wages up.
“As a driver of inflation, this persistent high wage growth is something that the Bank of England has their eye on.
“If it continues, it will be a sore spot for an already divided Monetary Policy Committee (MPC) as it explores further interest rates cuts this year. Nonetheless, the market is likely to shift under increased pressures as the year progresses.
“Job vacancies have been decreasing since mid-2022 and have once again fallen for the quarter February to April 2025, compared to February to April 2024, there are 131,000 (14.7 per cent) less vacancies in the UK”
He added, “This is compounded by the impact of rising employment costs rise in employer NICs and the National Living Wage and ongoing trade uncertainty, which will both apply a downwards push on business confidence and recruitment.
“The Prime Minister may have won some small tariff victories on specific goods, but we are certainly not out of the woods when it comes to protecting UK exports.”
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