UK unemployment rises to 5%, the highest level in four years | Economics

Unemployment in the UK has risen more than expected to its highest level in four years, official figures show, as the labor market slowdown worsens ahead of Rachel Reeves’ autumn budget.

With less than three weeks to go before the Chancellor’s tax and spending announcement, figures from the Office for National Statistics (ONS) show the headline unemployment rate rose to 5.0% in the three months to the end of September, from 4.8% in the previous quarter.

City economists had predicted the increase would rise to 4.9 percent. The official headline unemployment rate was last higher in the first quarter of 2021, at the height of the Covid outbreak.

ONS director of economic statistics Liz McKeown said: “These figures point to a weakening labor market.”

The ONS’s figures are based on the widely criticized workforce survey, which has suffered from falling response rates. Experts argued this left policymakers “flying blind” and risked decisions being made based on faulty data.

But separate data shows the job market has slowed sharply as employers remain under pressure from tax hikes, persistent inflation, high borrowing costs and a slow growth outlook.

Figures published by HMRC on Tuesday showed that the number of workers on company payrolls fell by 32,000 in October compared to September.

Reeves is expected to increase taxes in the budget to plug a deficit of up to £30bn in government finances. But business leaders warned this could harm jobs and growth.

More details coming soon…