UK unemployment has risen to 4.6 per cent in the three months to April, the highest rate recorded since summer 2021, according to new data from the Office for National Statistics.
The increase, up from 4.5 per cent in the previous quarter, adds fresh pressure on Chancellor Rachel Reeves as concerns grow over a weakening labour market.
While regular pay continued to grow, rising by 5.2 per cent year-on-year, this marked a slowdown compared to previous months.
After adjusting for inflation using the Consumer Prices Index, real wages were up by 2.1 per cent, suggesting that workers are starting to recover some of the spending power lost during the cost of living crisis. Including bonuses, total pay grew slightly faster, with real total earnings up by 2.3 per cent.
However, the broader economic picture is less encouraging. The number of job vacancies fell by 63,000 in the latest quarter, marking the fifteenth consecutive drop and leaving vacancies nearly 60,000 below pre-pandemic levels.
Employers have reported delaying recruitment or failing to replace staff, reflecting ongoing uncertainty about the UK’s economic outlook.
While the rise in real wages may offer some political breathing room, the increase in unemployment and the steady decline in job vacancies paint a more fragile picture.
Reeves has promised to deliver economic stability and growth, but the latest figures suggest the recovery remains uneven and exposed to further shocks.
Economists have warned that while falling inflation and wage growth may open the door to interest rate cuts later in the year, the labour market’s slowdown could weigh on tax revenues and household confidence.
With unemployment now at its highest point in nearly four years, the Government faces a difficult balancing act of trying to claim progress on living standards while tackling a rise in joblessness that risks eroding that same progress.
The number of job vacancies fell by 63,000 in the latest quarter
GETTY/ONS
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, the wealth manager said: “Easing wage growth isn’t the best news for consumers still struggling with high living costs.
“Inflation is creeping up once again though workers can take some comfort that wages are still rising faster than inflation, with real terms growth of 2.1 per cent on regular salaries and 2.3 per cent on total pay, which includes bonuses, once CPI inflation is accounted for.
“While pre-tax headline incomes are stretching further than they did 12 months ago, households would be wise to tread carefully when it comes to their personal finances.
“Pay growth could slow further in the coming months if the Chancellor’s new tax measures on businesses and US President Donald Trump’s tariff policies dampen economic growth as expected.
“Many may already be feeling the squeeze as frozen income tax thresholds – set to remain in place until at least 2028 – drag more people into higher rates tax as their income increases. Add in the effects of ‘Awful April’ when a raft of bill hikes hit consumer budgets and for many it may feel like disposable incomes are running on the spot rather than improving in real terms.”
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The number of employees on UK payrolls fell by 55,000 in April 2025, according to revised figures.
ONS
