UK job market weakens ahead of business tax hike, US tariffs

The number of UK payrolled workers and job vacancies slid ahead of businesses being hit by tax hikes and US tariffs, official data showed on Tuesday.

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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 per cent 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 per cent 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".