The UK unemployment rate increasing to 5% is a blow to the Government’s tax take, say leading audit, tax and business advisory firm, Blick Rothenberg.
Robert Salter a Director at the firm, said, “4.2% of people were unemployed when the Government came to power in 2024, and today’s figures from the Office of National Statistics (ONS) reveal it has increased to 5%.
“Each additional individual who is unemployed represents both a reduction in the Government’s tax take and an increase in cost of providing social support.
“There has been a lot of speculation and commentary on the size of the UK’s ‘fiscal black hole’ in recent weeks and the increase in the unemployment rate will only compound the challenges faced by the Chancellor, Rachel Reeves as the Budget looms ever closer.
“The Government’s own decisions are a factor driving increased unemployment. The increase in employer’s National Insurance Contributions (NIC) from April 2025, the ongoing increase in the National Minimum Wage, up by 37% since April 2021 and the forthcoming introduction of ‘day 1’ employment law protections for new employees have made staffing more expensive for businesses, causing them to cut jobs and abandon plans to increase employee numbers.”
He added, “While the focus of the last few weeks has been on what tax rises Rachel Reeves may be introducing in her Budget later this month, it is vital that she uses the Budget to lay the foundations for stronger economic growth over the coming years, as otherwise she will be ‘fiddling whilst Rome burns’.”
