Britain's unemployment rate unexpectedly rose to 5 per cent in the three months to March, up from 4.9 per cent in the three months to February. Vacancies slumped to their lowest level for five years, and regular earnings growth fell back further, only just outpacing Consumer Prices Index inflation.
Britain's rate of unemployment has unexpectedly risen as vacancies slumped to their lowest level for five years amid a sharp pull back in hiring across under-pressure retail and hospitality sectors, official figures revealed today.
The Office for National Statistics (ONS) said the jobless rate rose to 5 per cent in the three months to March, up from 4.9 per cent in the three months to February. Most economists had expected the rate to remain unchanged. The ONS estimated the number of workers on UK payrolls also slumped by 100,000 during April, which is the largest fall since May 2020 at the start of the Covid pandemic, though these figures are subject to revision.
It said vacancies dropped by 28,000 quarter-on-quarter to 705,000 in the three months to April, which is the lowest level since the same period in 2021. Regular earnings growth meanwhile also fell back further, to 3.4 per cent in the first quarter, down from 3.6 per cent in the three months to February – only just outpacing Consumer Prices Index inflation, by 0.3 per cent.
Liz McKeown, ONS director of economic statistics, said: 'Latest figures suggest the labour market remains soft, with vacancies at their lowest level in five years and unemployment higher than a year ago.
' She added: 'Lower-paying sectors such as hospitality and retail have seen some of the largest falls in vacancies and payroll numbers, both in recent months and over the last year. ' Separate analysis from the Institute for Fiscal Studies (IFS) today showed an alarming decline in the proportion of young people in employment which has led to rates approaching those triggered by major shocks such as the Covid pandemic and the 2008 economic crash.
Researchers at the IFS said the findings will be 'setting off alarm bells among ministers', as they called for more evidence on the causes of a trend that threatens to have long-term consequences for many young people. The rise in youth joblessness is the primary factor in the proportion of young people not in education, employment or training (Neet), as concerns grow about a high-profile, deep-rooted problem that analysis suggests may not ease when economic conditions improve.
An assessment by the IFs showed the proportion of 16 to 24-year-olds in payrolled employment dropped by 4.3 percentage points, from 54.9 per cent to 50.6 per cent, between December 2022 and December 2025. This decline is equivalent to 330,000 young people being affected. The fall during the Covid pandemic was 6.5 percentage points, while the decline around the 2008 financial crisis was 5.4 percentage points.
The share of young people who are Neet increased from 10.8 per cent, equivalent to 760,000 people, in 2022 to 12.8 per cent (960,000) at the end of 2025. Chancellor Rachel Reeves, pictured at a G7 finance ministers' meeting in Paris yesterday Meanwhile Sir Keir Starmer will assemble his new-look Cabinet for the first time today after insisting again that he would not 'walk away' from Downing Street.
This morning's regular Cabinet meeting will be the first since Wes Streeting resigned as health secretary and called on the Prime Minister to quit last week. It also follows Greater Manchester Mayor Andy Burnham's announcement that he intends to fight the Makerfield by-election. Mr Burnham has said a vote for him would be a vote to 'change Labour', while Sir Keir has insisted he will not set out a timetable for his departure even if the mayor returns to Parliament.
Polling by YouGov suggested Mr Burnham would be Labour members' preferred candidate for leader, with 47 per cent saying he would be their first choice for the job. Some 31 per cent ranked Sir Keir as their first choice, followed by former deputy prime minister Angela Rayner on 8 per cent. Just 4 per cent ranked Mr Streeting as their first choice
Unemployment Rate Vacancies Regular Earnings Growth Consumer Prices Index Inflation Institute For Fiscal Studies Youth Joblessness Neet Andy Burnham Makerfield By-Election Rachel Reeves G7 Finance Ministers' Meeting Cabinet Meeting Wes Streeting Health Secretary Keir Starmer New-Look Cabinet Departure Polling By Yougov
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