UK Employment Plummets by the Most in 5 Years

LONDON – UK employment plunged by the most in five years and wage growth slowed more than forecast, as the labour market deteriorated after Chancellor of the Exchequer Rachel Reeves ramped up the cost of hiring.

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Tax data showed the number of employees on payroll tumbled 109,000 in May, the biggest decline since May 2020, the Office for National Statistics (ONS) said on June 10. It was much worse than the 20,000 fall predicted by economists.

It took the number of jobs lost since Ms Reeves’ first budget in October 2024 to 276,000 and suggested that the labour market has worsened significantly since a £26 billion (S$45 billion) tax hike on businesses took effect in April. The payrolls number is often revised and the ONS said May should be treated with extra caution as the estimate is based on partial figures.

The figures suggest firms are seeking cost savings after Labour increased payroll taxes for businesses and hiked the minimum wage. That will likely ease concerns at the Bank of England (BOE) that inflation will continue to be fuelled by higher wage growth, as officials try to contain a fresh pickup in price pressures.