UK Unemployment Rises To 5%

Britain’s unemployment rate rose unexpectedly to 5 percent in the third quarter, reaching its highest level since early 2021, official figures revealed Tuesday ahead of the government’s upcoming budget.

The rate climbed from 4.7 percent in the second quarter, the Office for National Statistics (ONS) reported, exceeding analysts’ forecast of 4.9 percent for July to September. ONS Director of Economic Statistics Liz McKeown noted that the number of people on payroll has been falling, with revised tax data showing declines for most of the past 12 months.

The figures add pressure on Prime Minister Keir Starmer’s Labour government, which continues to struggle in popularity 16 months after the last general election.

“There will be no pre-budget comforts to take from today’s employment data,” said Isaac Stell, an analyst at Wealth Club. “Not only has the unemployment rate increased, but wage growth continues to shrink. With budget speculation at its peak, businesses are delaying hiring and investment decisions until there is more clarity on the economic outlook.”

Analysts suggested that the weaker employment data could increase the likelihood of the Bank of England cutting its main interest rate at its December monetary policy meeting, providing some relief.

Finance Minister Rachel Reeves has indicated that the upcoming budget will include tax increases aimed at reducing government debt and funding public services.