UK unemployment rate hits 5% ahead of key budget announcement
UK's unemployment rate increased to 5% in the third quarter of the year, surpassing expectations and reaching its highest level since early 2021.
The Office for National Statistics (ONS) released the data on Tuesday, showing a rise from 4.7% in the second quarter, News.Az reports, citing foreign media.
The uptick in joblessness comes just ahead of the UK government's crucial annual budget, which is set to be delivered on November 26.
The rise in unemployment was greater than analysts' forecast of a 4.9% jobless rate, highlighting ongoing struggles in the labour market. The figures also show a decline in the number of people on payrolls, with revised tax data indicating a fall in employment across most of the last year.
"The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months," said Liz McKeown, ONS director of economic statistics.
The timing of the report is particularly significant as it comes just weeks before the Labour government's budget, which is expected to include tax hikes amid weak economic growth. The latest unemployment data has raised concerns that the UK economy is struggling to recover, and economists have warned that the higher jobless rate could undermine Prime Minister Keir Starmer's government ahead of the budget.
Analysts like Isaac Stell, an investment manager at Wealth Club, noted that "not only has the unemployment rate risen, but wage growth continues to shrink," further dampening the outlook. Stell also pointed to the uncertainty surrounding the budget, with businesses holding off on hiring and investment until they know how the government plans to address the economic challenges.
However, some analysts are speculating that the weak employment figures may increase the chances of the Bank of England cutting interest rates in December to help stimulate the economy. This could provide some relief, but many businesses remain cautious about the economic environment.
Finance Minister Rachel Reeves has already indicated that the budget will include tax rises to reduce government debt and fund vital public services.
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