The number of UK payrolled workers and job vacancies slid ahead of businesses being hit by tax hikes and US tariffs, official data showed Tuesday.
Preliminary figures for March showed the number of payrolled employees dropped by 78,000 from February, the Office for National Statistics said in a statement.
That compared with a decrease of 8,000 in February from January, the ONS added.
Job vacancies in the three months to March dipped below pre-pandemic levels for the first time since 2021.
Wage growth, however, remained elevated, with the annual growth in employees’ average regular earning edging up to 5.9 percent in the three months to the end of February.
The figures cover the period before the introduction this month of business tax hikes laid out in the Labour government’s maiden budget in October.
It “provides some tentative evidence that businesses started to respond to rises in business taxes and the minimum wage from this month by reducing headcount”, said Capital Economics UK economist Ashley Webb.
Businesses have in particular criticised the tax increases, warning it could lead to them holding back on hiring and limiting pay rises.
The ONS added that the unemployment rate remained at 4.4 percent in the three months to the end of February.
Webb said jobs growth could be further impacted “from the recent increase in uncertainty due to the chaotic way US tariff policy is being set”.
The UK was hit with a 10 percent levy on imports to the United States as part of President Donald Trump’s sweeping tariffs, which also target sectors like steel, aluminium and autos.
It creates a difficult situation for the Bank of England which has to contend with persistently high wage growth and stubborn inflation as well as the risks to the economy posed by tariffs.
“With pay growth still running above levels consistent with the inflation target, the… (BoE) will likely continue its gradual approach to cutting interest rates,” said Yael Selfin, chief economist at KPMG UK.
“However, that will be set against growing risks to the domestic economy which are likely to depress labour market activity,” she added.
The BoE recently halved its forecast for the country’s total output this year, blaming global risks amid US tariff threats and deteriorating UK business confidence.
That came as the central bank cut in February its key interest rate by a quarter point, the third such reduction in six months.
AFP
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