UK Unemployment Reaches Four-Year High in 2025

The UK's unemployment rate climbed to 4.6% in the three months to April 2025, the highest since mid-2021, as businesses reduced hiring and cut jobs amid rising staff costs and higher employer taxes. Payrolls fell by 109,000 in May, marking the largest monthly drop since May 2020, while job vacancies declined for the 35th consecutive quarter by 63,000 to 736,000. Average regular earnings rose by 5.2%, outpacing inflation but growing at their slowest rate since last year. The rise in unemployment and a weakening labor market are attributed to recent national insurance and minimum wage increases, economic uncertainty, and regulatory changes. Public sector employment continues to grow, contrasting with declines in the private sector. These developments increase pressure on the Bank of England as it weighs future interest rate cuts.