UK unemployment hits highest level in 4 years

UK unemployment has hit its highest point since the pandemic as businesses have grappled with increased hiring costs under Keir Starmer’s government.

Data published by the Office for National Statistics on Tuesday 10 June shows that the unemployment rate increased to 4.6% in the three months to the end of April 2025, up from 4.5% over the previous three-month period.

This is the highest rate of unemployment in the country since June 2021, the peak of the COVID-19 pandemic. The data also shows some 276,000 jobs have been lost since Chancellor Rachel Reeves delivered her last budget.

The drop in payrolled employees in May was 109,000, much higher than. It’s the fourth straight drop since the start of the year, although the ONS has typically revised this number as more accurate data becomes available.

ONS data also shows weaker than expected UK headline wage growth, which was 5.3% for the three months to April (including bonuses). The strongest annual wage growth was reported in the retail, hotels and restaurants sector, followed by construction.

While the market has not reacted strongly to these figures, the numbers will heap added pressure on Chancellor Rachel Reeves, who is expected to deliver her Spending Review on Wednesday (11 June).

Day-to-day spending is only set to increase by 1.2% per year in real terms, which implies a 1.3% cut on average for many areas after taking into account likely above-average settlements for health, childcare and defence.

Public service areas that the government has not yet made any firm commitment to protecting – and which therefore face real-terms budget cuts – include local government (which provides adult and children’s social care, housing services, and waste collection, among others), the police, criminal courts, and prisons.