Reacting to the latest labour market data from the ONS, Patrick Milnes, Head of People and Work at the British Chambers of Commerce, said:
“While unemployment has seen a surprise fall to 4.9%, the expectation is that it will rise this year as business uncertainty caused by the Iran War overshadows the UK economy.
“With the cost of employment also high, and expected to rise as the Employment Rights Act comes into effect, our latest forecast expects unemployment to hit 5.5% this year. The slow-down in wage growth indicates businesses are taking their foot off the gas and the labour market will continue to loosen.
“With the conflict in Iran likely to drive higher inflation and weaken growth, the spectre of stagflation is beginning to grow.
“This has upended expectations at the start of the year of further interest rate cuts by the Bank of England, increasing the level of uncertainty still further.
“The Government must move swiftly to show that it understands the problems firms face. Action to ease the cost burdens they face, such as help with electricity bills and reform of business rates would go a long way to demonstrating this.”
More detail on the labour market data can be found here.