UK Unemployment Hits Five Percent Ahead of Key Budget

Britain’s unemployment rate rose to five percent in the third quarter, the highest level since early 2021, official data from the Office for National Statistics (ONS) revealed Tuesday. The increase from 4.7 percent in the previous quarter exceeded analysts’ expectations of 4.9 percent and comes ahead of the Labour government’s annual budget on November 26, which is expected to include tax hikes amid weak economic growth.

ONS director of economic statistics Liz McKeown noted that payroll numbers have been falling, with revised tax data showing declines for most of the past 12 months. Analysts say the data adds pressure on Prime Minister Keir Starmer’s Labour administration, which is trailing in popularity polls 16 months after winning the general election.

Investment manager Wealth Club analyst Isaac Stell said the rise in unemployment, coupled with shrinking wage growth, has led businesses to delay hiring and investment decisions until the budget’s details are clear. The weak employment figures may, however, increase the likelihood of the Bank of England cutting its main interest rate in December. Finance Minister Rachel Reeves has indicated the budget will raise taxes to reduce government debt and support public services.

Written by Adeyemi Adewale