Unemployment rate rises again unexpectedly as economic uncertainty takes its toll

Unemployment rates have risen unexpectedly in March. Credit: PA

Britain’s unemployment rate has risen again unexpectedly as economic uncertainty takes its toll on the UK’s jobs market, according to official figures.

In a double blow, the number of vacancies have fallen to the lowest level for 18 months.

The rate of UK unemployment rose to 3.9% in the three months to March, up from 3.8% in the previous quarter, the Office for National Statistics (ONS) said.

Most economists had expected the rate to remain unchanged at 3.8%.

The figures show the unemployment rate is at its highest level since the three months to January 2022.

The number of vacancies fell by 55,000 quarter on quarter to 1.08 million in the three months to April, marking the 10th fall in a row.

The ONS said this reflects “uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment”.

But the figures also showed a rise in the employment rate to 75.9% and a fall in inactivity as more men in particular starting looking for work.

In another sign of a flagging jobs market, the more timely Pay As You Earn (PAYE) figures showed the first fall in workers on payrolls since February 2021, down 136,000 to 29.8 million.

Darren Morgan, director of economic statistics at the ONS, said: “Employment and unemployment both rose again in the first three months of 2023, driven in particular by men.

“This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.

“Despite continued growth in pay, people’s average earnings are still being outstripped by rising prices.”

Reacting to the figures, Chancellor Jeremy Hunt said: “It’s encouraging that the unemployment rate remains historically low but difficulty in finding staff and rising prices are a worry for many families and businesses.

“That’s why we must stick to our plan to halve inflation and help families with the cost of living, while delivering our childcare reforms and supporting older people and disabled people who want to work.”

Chancellor Jeremy Hunt says he must stick to his vow to halve inflation as unemployment unexpectedly rises. Credit: PA

The Liberal Democrats said the latest Office for National Statistics unemployment and earnings figures showed the Tories were “out of touch”.

Lib Dem Treasury spokesperson Sarah Olney said: “This is a damning verdict on the government’s attempt to ease the cost-of-living crisis.

"The Conservative Government is proving to be completely out of touch and out of ideas when it comes to rising prices.

“Behind these grim figures are families and pensioners struggling to pay their bills.

"Jeremy Hunt must immediately launch a plan to bring down food prices and bring down energy costs for businesses. There is no time to waste in ending this crisis.”

The data also laid bare the impact of strikes across Britain, with 556,000 working days lost due industrial action in March, up from 332,000 in February.

But the pay gap between public and private sector is narrowing.

The ONS said average regular pay growth for the private sector stood at 7% in the three months to March and 5.6% for public sector workers – with the latter being the largest since August to October 2003.

The figures showed the number of unemployed Britons rose by 60,000 to 1.3 million in the three months to March, while those in employment also lifted – by 182,000 to 33 million.

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know.