Key Highlights
- The UK’s jobless rate has risen to 5%, the highest level since December 2020-February 2021.
- The ONS reported a larger-than-predicted increase, particularly affecting men.
- Chancellor Rachel Reeves is facing criticism for her budget measures, including a £25 billion tax hike on employers.
- The UK economy has been hit by increased minimum pay and employer national insurance contributions, amid heightened trade tensions.
Economic Downturn Hits British Job Market
Breaking news reveals that the United Kingdom’s jobless rate surged to 5% in the three months leading up to September, marking its highest level since late 2020. This significant jump is attributed to Rachel Reeves’ controversial budgetary measures introduced last year, which critics argue have contributed to a substantial increase in unemployment.
The Office for National Statistics (ONS) reported that the unemployment rate climbed from 4.8% recorded in August, overshooting economists’ expectations. Men were particularly affected by this shift, with their unemployment rates increasing more than those of women. This marks a worrying trend as the economy attempts to recover from pre-pandemic levels.
Chancellor’s Measures Spark Criticism
Rachel Reeves, the UK Chancellor, has been heavily criticized for her budgetary policies that have imposed significant costs on employers. Her decision to levy an extra £25 billion in taxes on businesses is seen as a major factor behind the current economic downturn and job losses.
Opposition parties and business leaders are urging Reeves to reconsider these measures within two weeks, arguing that they are damaging employment opportunities. Daisy Cooper, Liberal Democrat Treasury spokesperson, stated, “Surely the writing is on the wall now for the Chancellor’s jobs tax. Everyone except Rachel Reeves seems to have woken up to the fact that forcing small businesses to pay more in tax for giving people jobs would damage job opportunities.” Such comments highlight the political and economic tension surrounding these budgetary decisions.
Broader Economic Context
The rise in unemployment comes amid other challenges faced by the UK economy. According to ONS data, there was a 32,000 decline in payrolled employment during October, suggesting that previous trends of job losses may be intensifying. This follows a period of slowing declines since April, when budget measures began taking effect.
These economic pressures coincide with broader global uncertainties, including Brexit and ongoing trade tensions, particularly those initiated by the US under former President Donald Trump’s administration through increased tariffs on British goods. The ONS noted that while wage growth has slowed in the private sector, public sector pay remains strong due to early awarding of pay rises.
Implications for Future Budgets
The upcoming budget on November 26th is expected to address these economic challenges, with Chancellor Reeves signaling a shift away from her previous tax pledges. The government faces significant financial pressures, estimated at around £30 billion, necessitating difficult choices in expenditure and revenue generation.
Reeves has signaled a departure from Labour’s manifesto commitment not to raise income tax, national insurance, or VAT. However, the exact nature of these changes remains unclear, with potential measures including lifting the two-child benefit cap to support low-income families.
The upcoming budget will be crucial in determining whether Chancellor Reeves can navigate this complex economic landscape and restore confidence among both businesses and consumers.
As the UK economy grapples with these multifaceted challenges, all eyes are on Rachel Reeves as she prepares her second budget. The outcome of this critical policy decision could significantly shape the trajectory of the British economy in the coming years.
