Unemployment in the UK has increased slightly to 4.5% amidst rising employment costs stemming from the Chancellor's Autumn Budget, which raised employer national insurance contributions. Average earnings are reported at 5.6%, which looks positive until adjusted for inflation, resulting in a 2.6% real increase. Experts warn that businesses are reacting by freezing pay and preparing for layoffs as job vacancies decrease significantly since mid-2022. This dynamic raises concerns about inflation and the potential for interest rate adjustments by the Bank of England.
As a driver of inflation, this persistent high wage growth is something that the Bank of England has their eye on.
Job vacancies have been decreasing since mid-2022 and have once again fallen for the quarter February to April 2025.
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