BREAKING

UK unemployment on the rise despite record wage growth: Reports

By Al Mayadeen English
Source: Agencies
15 Aug 2023 18:43

UK unemployment rises to 4.2 percent as wages experience record annual growth amidst high inflation and labor market challenges.

a lone man walks, past the famous Cavern Club and other closed pubs and bars in Liverpool, England Oct. 14, 2020 (AP)

According to a report by the Office for National Statistics (ONS), the United Kingdom experienced an increase in unemployment over the 3 months leading up to June.

The report shows that the unemployment rate reached 4.2 percent, up from 4.0 percent in the preceding three months until the end of May.

According to Darren Morgan, the director of economic statistics at the ONS, this uptick can be attributed to individuals taking slightly more time to secure employment than those who recently entered the job market.

Additionally, the report shows that the number of people incapacitated by long-term illness and consequently unable to work has reached a new record.

The UK finance ministry emphasized that the country's unemployment rate remains lower than that of comparable economies such as Canada, France, Italy, Spain, and the Euro area.

Although the current unemployment rate is the highest since the period between July and September 2021, the ministry underscored that it is still historically low.

Following the data release, experts predict that the Bank of England will likely further increase its key interest rate, which it has already hiked multiple times since late 2021.

Ruth Gregory, deputy chief UK economist at Capital Economics, suggested that the central bank views the rise in unemployment as an indicator of a cooling labor market, which could influence its decision to raise interest rates to 5.5 percent.

Back in July, it was reported that borrowing costs in the UK hit a 2008 financial crisis high as the country's economy struggles to push back skyrocketing inflation amid continued hikes in interest rates.

Living standards in the UK are being squeezed more severely than at any point since records have been kept in the 1950s, as soaring inflation erodes wage growth for employees across practically all economic sectors.

Last May, Britain's annual inflation held at 8.7 percent compared to the predicted 8.4 percent, prompting the central bank to issue an unanticipated rate hike.

During the same month, food inflation in the former EU member and the world's sixth-largest economy was running at 18.3% and 14.6% in June, according to official data.