UK Unemployment Hits 5%, Highest Since 2021, Ahead of Labour’s First Budget

LONDON: Britain’s unemployment rate has risen to five percent, the highest level in nearly five years, according to data released Tuesday by the Office for National Statistics (ONS).

The rate increased from 4.7 percent in the second quarter, exceeding analysts’ expectations of 4.9 percent. The rise comes just weeks before the Labour government delivers its first annual budget on 26 November, which is expected to include tax rises as the economy struggles with weak growth.

“The number of people on payroll is falling, with revised tax data now showing declines in most of the last 12 months,” said Liz McKeown, ONS director of economic statistics.

The figures pose a political and economic challenge for Prime Minister Keir Starmer, whose government faces falling poll numbers 16 months after taking office. Analysts said the latest data offered “no pre-budget comforts” for the government as wage growth slows and business confidence weakens.

Some economists said the weaker labour market could increase the likelihood of the Bank of England cutting interest rates at its next meeting in December.

Finance Minister Rachel Reeves has already indicated that higher taxes are likely in the upcoming budget to reduce public debt and maintain funding for essential services.

By RSS/AFP