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Rachel Reeves ‘needs a desperate rethink’ before November Budget as UK job market tanks

The unemployment rate has hit its highest level in over four years, ONS figures show.

Rachel Reeves

Rachel Reeves’ economic strategy ‘needs a desperate rethink’ (Image: Getty)

Rachel Reeves has been urged to desperately rethink her approach to the economy as figures show Britain’s unemployment rate hit its highest level in over four years. The jobless rate increased unexpectedly to 4.8% in the three months to August, up from 4.7% in the previous three months, according to Office for National Statistics (ONS) figures released on Tuesday (October 14).

It is the highest since March to January 2021, at the height of the Covid pandemic. The ONS warned the figure needs to be treated with caution as it continues to overhaul its labour market survey. Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, the data set was a damning indictment of the Government’s economic policy since Labour swept to power.

Mr Mather-Holgate said: “Unemployment up, employment down, vacancies down. If Rachel Reeves needed confirmation that her hike in National Insurance contributions, the jobs tax and corporation tax were having an effect, she’s just been hit in the face with it.

“She’s got a few more weeks until her autumn Budget and her strategy needs a desperate rethink or (Prime Minister Sir Keir) Starmer needs to start looking at the jobs boards. This is not how they wanted things to go, but when incompetence and complacency go hand in hand these are the results you see,” reports Newspage Media. 

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, said Britain’s jobs market is an increasingly miserable place to be.

She added: “Unemployment has been trending up for three years and the rate is now higher than before the pandemic. Vacancies have also fallen for the 39th month running. Meanwhile, the number of people looking for work is on the rise.”

Ms Coles said finding a job is becoming more of an uphill task with each passing month, adding: “For those in work, meanwhile, wages are now rising only a fraction ahead of inflation.”

The ONS said real earnings growth, with the Consumer Prices Index (CPI) taken into account, fell back to 0.9% in the three months to August, which is the lowest level for two years.

Private sector pay growth also slowed to its lowest rate in nearly four years, at 4.4%, while public sector pay growth increased to 6%, according to the ONS.

Stephen Perkins, Managing Director at Yellow Brick Mortgages, worried that the Chancellor’s next Budget will make things worse.

He added: “These latest figures clearly demonstrate the failure of the last Budget. For all the pledges of not impacting working people, this clearly isn’t the case.”

Work and Pensions Secretary Pat McFadden argued the numbers of people in work and looking for work were at a record high.

He added: “However, there are still too many people locked out of employment or training and missing out on the security a good job provides.

“That’s why we are reforming job centres and investing in our Connect to Work programme to build a workforce fit for the future and boost economic growth.”

The ONS said there were signs of the jobs market downturn “levelling off”, with a rise in UK workers on payrolls. Vacancies fell by 9,000, or 1.3%, to 717,000 in the quarter to September 30, which is the smallest decline since the three months to February.

ONS Director of Economic Statistics, Liz McKeown, said: “After a long period of weak hiring activity, there are signs the falls we have seen in both payroll numbers and vacancies are now levelling off.

“We see different patterns across the age ranges with record numbers of over-65s in work, while the increase in unemployment was driven mostly by younger people.”

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