In February, British unemployment surged beyond expectations, signaling potential employer layoffs prompted by elevated interest rates.
The Office for National Statistics revealed a jump in the unemployment rate to 4.2%, surpassing the 4% forecasted by analysts.
Liz McKeown, ONS Director of Economic Statistics, noted, “We are now seeing tentative signs that the jobs market is beginning to cool.”
Additionally, average regular pay growth, excluding bonuses, dipped to 6.0% from 6.1%, contributing to concerns about economic stability. Despite this, when factoring in Britain’s annual inflation rate, real wages only rose by 2.1%.
Commenting on the situation, Yael Selfin, chief economist at KPMG UK, remarked, “Easing pressure in the labour market keeps the Bank of England on track for a summer rate cut.”
The Bank of England had previously maintained its key interest rate at a 16-year high of 5.25% in March, with overall UK inflation persistently exceeding its 2.0% target.
While inflation saw a decline to a near two-and-a-half-year low of 3.4% in February, providing some relief in the nation’s cost-of-living challenges, concerns linger over the broader economic implications.
