UK Unemployment Rates Rise Amid Economic Adjustments
The UK’s unemployment rate has escalated to its highest level in four years, fueled in part by last year’s decision by Chancellor of the Exchequer, James Reeves, to increase employers’ National Insurance contributions and raise the National Living Wage. The Bank of England’s latest Monetary Policy Report, released Thursday, forecasts that the jobless rate will reach 4.9 percent by the end of the year, up from 4.7 percent in June, reports 24brussels.
This adjustment marks the fifth reduction in interest rates over the past year, yet the current rates remain high enough that many economists believe they may be hindering economic growth. The Bank reiterated its caution regarding the enduring inflation, predominantly reflected in rising food and service prices, stating that any future easing of monetary policy should be conducted “gradually and cautiously.”
Inflation, which had previously dipped from a peak of over 11 percent in 2023, has shown signs of resurgence this year. The Bank indicated that inflation could reach 4.0 percent by September and is unlikely to achieve the target rate of 2 percent until 2027.
In light of this economic landscape, four out of the nine members of the Bank of England’s Monetary Policy Committee opposed the latest rate cut, including Chief Economist Huw Pill and Deputy Governor Clare Lombardelli. Alan Taylor, who has historically focused on the risks associated with economic downturns, had initially voted for a more substantial, half-point reduction.
