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UK Labour Market Weakens as Unemployment Hits Four-Year High

New data shows rising unemployment, falling job vacancies, and slower wage growth as businesses face increased costs and economic uncertainty.

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Signs are seen outside a job centre in Borough, in London, Britain, December 1, 2024. REUTERS/Mina Kim
Workers walk through the Canary Wharf financial district, ahead of a Bank of England decision on interest rate changes, in London, Britain, August 3, 2023. REUTERS/Toby Melville

Overview

  • The UK's unemployment rate rose to 4.5% in the first quarter of 2025, the highest level since mid-2021, according to the Office for National Statistics (ONS).
  • Job vacancies dropped to 761,000 in the three months to April, falling below pre-pandemic levels for the first time in four years.
  • Average wage growth slowed to 5.6% in the three months to March, down from 5.9%, though it continues to outpace inflation, which stood at 2.6% in March.
  • The number of payrolled employees fell by 53,000 in the first quarter, with early estimates showing an additional 33,000 decline in April.
  • Employers cite increased costs from National Insurance and minimum wage hikes, alongside global economic uncertainty, as key factors behind hiring freezes and redundancies.