Britain’s unemployment rate has hit its highest level in almost four years, according to official figures, while wage growth has eased more than anticipated as employers grapple with rising staff costs.
The Office for National Statistics (ONS) reported that average regular earnings, excluding bonuses, fell to 5.2 per cent in the three months to April, a sharp decrease from 5.5 per cent in the previous three months. This is the lowest rate since the third quarter of last year.
Although wage growth continues to outpace inflation, up by 2.1 per cent with Consumer Prices Index inflation taken into account, the figure fell short of expectations, with most experts having predicted a decrease to 5.3 per cent.
The rate of unemployment also jumped to 4.6 per cent in the three months to April, up from 4.5 per cent in the three months to March and the highest level since the three months to July 2021.
The figures also showed vacancies tumbled by 63,000 to 736,000 in the three months to May, while payroll data revealed the biggest drop for five years last month, down 109,000 to 30.2 million.
It coincided with firms facing a hike in national insurance contributions in April, which had been announced in October’s budget.
The figures were released just hours before Chancellor Rachel Reeves is expected to announce funding increases for the NHS, schools and defence, along with a number of infrastructure projects on Wednesday.
But other areas could face cuts as she seeks to balance manifesto commitments with more recent pledges, such as a hike in defence spending, while meeting her fiscal rules that promise to match day-to-day spending with revenues.
Ms Reeves, who had been in last-minute talks with several departments, received a boost on Tuesday evening as the Home Office – the final department to hold out – agreed to its funding.
Liz McKeown, ONS director of economic statistics, said: “There continues to be weakening in the labour market, with the number of people on payroll falling notably.
“Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.”
