UK economy: Surprise fall in unemployment rate to 4.9% | Money News

The UK’s unemployment rate has taken a surprise fall, according to official figures released amid warnings of a spike in job losses to come.

The Office for National Statistics (ONS) reported that the rate had eased to 4.9% during the three months to February.

That was down from a previous level of 5.1%.

But the ONS said that early data from HM Revenue & Customs, covering workers in payrolled employment, showed a drop of 11,000 during March – the first month of the US-Iran war that saw global energy prices rise sharply.

Money latest: Experts disagree on overpaying your mortgage

The wider figures showed average annual earnings growth, excluding bonuses, fell to 3.6% from 3.8%.

ONS director of economic statistics, Liz McKeown, said: “The number of workers on payroll remained broadly flat in recent periods, reflecting ongoing weak hiring.

“Vacancies fell to their lowest level in almost five years, but with unemployment also falling the number of vacancies per unemployed person remains broadly unchanged.

“Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies.

“Regular wage growth has slowed further with growth at its lowest rate in over five years.”

Recent forecasts have suggested the UK economy faces the biggest hit among developed nations due to the fossil fuel price crisis caused by the conflict in the Middle East.

The most recent study of the threat, by the respected Item Club, saw the UK’s jobless rate hitting 5.8% in just over a year’s time, affecting almost 250,000 people.

The higher oil and gas costs were tipped to push UK inflation to a peak of 4% this year – up from the current 3% level – with economic growth halving during 2026 to 0.7%. The report warned the economy would “flirt” with recession.

Share

IMF fears global recession is possible

Private sector employers have long blamed surging costs, including higher national insurance contributions and minimum wage levels, for cutting staff.

The unemployment rate stood at 4.1% when Labour took office.

The government has signalled targeted, rather than universal, help ahead as the energy shock builds though the prospects for immediate aid appear slim.

Chancellor Rachel Reeves is expected to use a statement to MPs later to claim her stewardship of the economy will help “to build a Britain that is prepared for what comes next”.

She will rule out financial support that puts further upwards pressure on inflation and instead look to invest in boosting defence and energy security.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the fullest version.

You can receive Breaking News alerts on a smartphone or tablet via the Sky News App. You can also follow @SkyNews on X or subscribe to our YouTube channel to keep up with the latest news.