UK unemployment rose back to four percent in the three months to the end of May, official data showed Tuesday, as the economy struggles with stubbornly-high inflation.
The unemployment rate increased from 3.8 percent in the three months to the end of April, the Office for National Statistics (ONS) said in a statement, dashing expectations for no change.
The rate was back at four percent for the first time since the start of 2022.
Despite the rise, finance minister Jeremy Hunt said Britain’s “jobs market is strong with unem-ployment low by historical standards”.
The ONS added that pay excluding bonuses had risen at record levels. “Due to high inflation, however, the real value of weekly earnings are still falling, although now at its slowest rate since the end of 2021,” noted Darren Morgan, director of economic statistics at the ONS.
Hunt insisted Monday there could “be no sus-tainable growth without eliminating the inflation that deters investment and erodes consumer confi-dence”.
UK annual inflation has eased in recent months but remains close to nine percent. It has held far above the Bank of England’s two-percent target for some time, triggering numerous interest-rate hikes from the central bank since late 2021.
“UK inflation is already running far hotter than policymakers had hoped, and price pressures will struggle to abate any time soon so long as earnings continue to grow at the current scorching pace,” said Matthew Ryan, head of market strategy at Ebury.
The ONS added that average regular pay, not including bonuses, was 7.3-percent higher in the three months to May compared with the same period one year earlier.
While BoE governor Andrew Bailey and Hunt urge pay restraint, thousands of public and private-sector workers continue to strike in a push for wages rises that keep up with rising consumer prices.
Advancing interest rates are slamming mortgage holders and worsening the nation’s cost-of-living crisis.
The BoE has ramped up its key rate 13 times in a row to five percent in an attempt to dampen elevated inflation.
Speaking Monday, Bailey said it was “crucial” the BoE met its “mandate to return inflation to its target, and provide the environment of price stability in which the UK economy can thrive”.
Commercial lenders have meanwhile dramati-cally lifted their own rates on home loans.
The average two-year fixed rate mortgage hit a 15-year peak of 6.66 percent on Tuesday, according to data provider Moneyfacts.
That was a level last seen during the 2008 global financial crisis and topped October’s high of 6.65 percent.
Soaring mortgage rates have triggered emer-gency government support, including flexibility over payments and a 12-month minimum period before lenders can repossess homes.
Analysts predict the situation will worsen in the coming months, as the BoE hikes interest rates further.
Amid the fallout, lawmakers on the cross-party Treasury Select Committee on Tuesday sought testimony from bosses of major UK mortgage lenders.—AFP
