UK Unemployment Hits 4.5%, Highest Since 2021 Amid Tax and Trade Pressures
The UK’s unemployment rate has climbed to 4.5% in the first quarter of 2025—its highest level since August 2021, according to figures released Tuesday by the Office for National Statistics (ONS).
The rise, up from 4.4% in the previous quarter, highlights growing pressure on the labour market as businesses respond to higher taxes, minimum wage hikes, and mounting global trade tensions.
April’s business tax increases—part of the Labour government’s fiscal agenda—and a 10% import tariff imposed by U.S. President Donald Trump have fueled cost concerns across industries.
“The broader picture is of a cooling labour market,” said Liz McKeown, ONS Director of Economic Statistics. “The number of employees on payroll fell in the first quarter.”
Despite job losses, wage growth remains strong, with both public and private sector pay rising at similar rates.
Economists say the data increases the likelihood that the Bank of England will continue cutting interest rates, following two reductions already this year.
“The jobs market weakened further, but pay growth hasn’t slowed significantly,” noted Ruth Gregory of Capital Economics, predicting two more rate cuts in 2025.
Analysts also warn that recent employment softness in April suggests businesses are cutting headcount to absorb rising costs, especially in labour-intensive sectors.
Comparatively, while the eurozone has seen stable jobless rates, and U.S. employment remains strong, the UK’s figures underscore growing uncertainty amid global economic realignment.
