Britain’s Job Market Struggles as Inflation Stays High

The labor markets of the United Kingdom weakened a notch just before an epoch-making April tax hike on employers. Job vacancies for the three months between January and March 2025 slipped below pre-COVID levels, while the March cutback of 78,000 jobs marked the largest layoff since the early days of the pandemic.

Fewer jobs, yet wages are moving upward. Average earnings (excluding bonuses) were up 5.9% in the three months ending in February this year compared to the same three months in the previous year. The dilemma for the Bank of England (BoE) is whether inflation is slowing enough for a cut in interest rates.

Deputy Director Public Policy @BCC_Jane: "The rising cost of employment is a major challenge for employers. While wage growth has eased once again, it continues to significantly outpace inflation."

Read our response to the latest labour market data https://t.co/EvQIzqnvYu

— BCC (@britishchambers) April 15, 2025

Many economists expect the BoE may start cutting rates in May. U.S.-imposed tariffs, meanwhile, remain a considerable source of friction in global trade.

The U.K. unemployment rate is still reported at 4.4%, but there are doubts from analysts about the accuracy of this figure due to outdated methods of data collection.