In the three months to April, the UK employment rate slightly increased to 75.1%, but the unemployment rate rose to 4.6%, marking its highest since July 2021. Economic inactivity fell marginally to 21.3%, while annual earnings growth decelerated to 5.3% from 5.5%. Expert Isaac Stell noted that businesses face mounting pressures from increased national insurance and minimum wage costs, inevitably leading to rising unemployment. The outlook for investment and consumer spending in the UK appears uncertain due to expected further tax rises and declining wage growth, potentially dampening economic activity.
The UK labour market is at a crossroads with the unemployment rate ticking higher and hitting its highest rate since July 2021.
Businesses have been burdened with rising national insurance bills and increased wage bills following the rise of the national minimum wage.
Consecutive months of rising unemployment were inevitable as businesses look to manage their costs amidst fiscal pressures.
Declining wage growth will dampen UK consumers' animal spirits, leading them to tighten their belts during uncertain times.
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