UK Jobless Rate Hits Highest Level Since 2021 as Businesses Feel the Pinch
The UK job market is showing more signs of strain, with unemployment rising to its highest point in nearly four years.
According to new figures released on Tuesday, the jobless rate climbed to 4.5% in the first quarter of 2025—up from 4.4% at the end of February. This marks the highest unemployment level seen since August 2021.
The data, released by the Office for National Statistics (ONS), captures the period just before new tax rules kicked in this April. The changes, part of the Labour government’s first budget, introduced a business tax hike that’s expected to impact hiring trends across various sectors.
Adding more pressure, recent tariffs from the U.S. — a 10% baseline duty introduced last month — have further complicated things for British exporters.
“The job market is clearly slowing down,” said Liz McKeown, Director of Economic Statistics at the ONS. “We’ve seen a dip in payroll numbers, which suggests companies are adjusting to tighter economic conditions. Wages are still growing, just not as quickly, and there’s not much difference between the public and private sectors right now.”
Economists believe this could influence the Bank of England to cut interest rates again later this year. The central bank has already lowered rates twice in 2025 to help stimulate the economy.
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, noted that while job numbers are falling, pay growth hasn’t cooled off significantly yet. “It’s likely we’ll see the Bank of England continue its pace of quarterly rate cuts,” she said.
Gregory also pointed out that more job losses were likely in April, as companies try to manage rising costs tied to higher taxes and a bump in the minimum wage.
