The number of people out of work rose to its highest level since the pandemic during the three months to April when higher taxes on business kicked in.
Latest official jobs market figures from the Office for National Statistics (ONS) show there were 1.64 million people classified as unemployed - out of work but looking for a job - during the quarter. That was the highest total for four years since the February to April quarter of 2021.
The unemployment rate also rose to a four year high of 4.6%, the highest since the May to July quarter in 2021.
Commentators said the figures showed how employers have slowed down recruitment and in some cases started shedding labour because if rising costs. Higher rates and lower thresholds for employer National Insurance originally announced in last October’s Budget came into effect during a month some have dubbed “awful April.”
In another sign of accelerating job shedding a first estimate of the number of payrolled employees in May 2025 show it down by 109,000 (0.4%) on the month and 274,000 (0.9%) on the year to 30.2 million.
While the jobless rate is still low by historical standards, it has been rising slowly but steadily over recent months and there are fears that the rate of increase will accelerate as more companies lay off staff.
Sainsbury’s and Santander are among major employers that have announced job cutting programmes over recent months.
London had the highest unemployment rate of any region at 6.4%.
Kate Nicholls, chief executive of industry body UKHospitality, said: “Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted by the Government’s own fiscal watchdog, major banks, and countless business groups.
“We were clear at the time that the changes to NICs were a tax on jobs, and so it is sadly proving.
“At a time when we are all striving to grow the economy and help people back into work, the changes to NICs are acting as an anchor to the Government’s ambitions.
“Sectors like hospitality are the very sectors you need to create jobs in every part of the UK and for people of all ages, education and background, but hospitality and those working part-time are among the hardest hit by these tax increases.
The number of vacancies also fell by 63,000 to 736,000 in the March to May quarter. This was the 35th consecutive quarterly decline with quarterly falls seen in 14 out of the 18 industry sectors. Vacancies were 59,000 below their January to March 2020 level.
The ONS data also showed wages continuing to rise far faster than inflation with regular pay, not including bonuses, up at an annual rate of 5.2% in the February to April quarter, a 1.4% rise in real terms after allowing for inflation.
Earnings growth was 5.1% for the private sector and 5.6% for the public sector.
Suren Thiru, Economics Director at accountancy body ICEAW, said: “These figures suggest that the UK’s jobs market took a damaging hit from ‘Awful April’, with the tough reality of sharply rising National Insurance and National Living Wage costs pushing more employers to cut staff.
“This decline in pay growth should gather pace over the summer with weaker economic conditions and elevated employment costs likely to accelerate the downward pressure on wages, aided by the longstanding problems with poor productivity.
“The UK’s labour market is in a painful period with eye-wateringly high business costs likely to mean more job losses this year, particularly if the Spending Review increases the odds of more tax hikes in the Autumn Budget.”
Richard Carter, head of fixed interest research at Quilter Cheviot said:“Economic growth may be appearing robust on the surface through the first part of the year, but today’s labour market statistics highlight there is a slowdown well and truly underway.
“The unemployment rate ticked up to 4.6% and currently sits at a three year high, while payrolled employee numbers fell by a staggering 274,000 year on year according to early estimates for May, with the decrease a more confident yet still significant 115,000 for April’s yearly comparison.”
