UK (Parliament Politics Magazine) – UK payrolls fell by 78,000 in March, showing a slowdown, but wages continue to rise and unemployment remains steady at 4.4% despite global economic pressures.
As reported by The Guardian, Britain’s company payrolls saw their fastest decline since the Covid pandemic, with rising global uncertainties and warnings that Rachel Reeves’ budget plan could lead to further job cuts.
ONS data about the UK’s job market and pay growth
The Office for National Statistics reports a 78,000 drop in the number of people employed in pay-as-you-earn jobs in March, following a revised decline of 8,000 in February.
The latest data shows a slowdown in the job market, with annual pay growth rising slightly over the three months to February, staying at high levels. Excluding bonuses, regular pay grew by 5.9%, a slight increase from the revised 5.8% in the previous three-month period ending in January, falling just short of the expected 6%.
Even with a decline in company payrolls, the ONS confirmed that the unemployment rate stayed steady at 4.4% for the three months leading up to February.
The government agency has raised concerns over the accuracy of employment data, pointing to low participation in the national labour force survey.
What did HMRC payroll data reveal about UK job changes?
According to the latest HMRC figures, health and social work saw a significant rise of 70,000 workers in the past month, the most notable change recorded.
Despite the increase in health and social work, the overall numbers were dragged down by a 92,000 reduction in accommodation and food service jobs.
The new data reveals a 26,000 drop in UK vacancies in the three months to March, bringing the total to 781,000, marking the first drop below pre-Covid levels since 2021.
Data from early 2025 revealed that companies were slashing jobs at the sharpest rate since the 2008 financial crisis, except during the COVID pandemic.
What did Ashley Webb say about UK employment and pay growth?
Ashley Webb, a UK economist at the consultancy Capital Economics, stated,
“Employment continued to cool, but it hasn’t collapsed as the dire warnings from some business surveys suggested.”
She added,
“But if the more uncertain backdrop from the recent US tariffs chaos soon becomes a bigger drag on firms’ hiring intentions, pay growth could start to fade more markedly.”
What did business leaders say about tax rises and job cuts?
According to business economists, the hikes outlined in Chancellor Rachel Reeves’ October budget would lead to job cuts and limit pay growth.
Economic experts said, despite signs of a slowdown in the job market, the outlook remained strong, driven by high wage growth and a low unemployment rate.
Impact of £25bn NI hike and wage increase on UK businesses
The government recently moved forward with a £25bn hike in employer national insurance contributions, affecting almost 1 million businesses, alongside a 6.7% increase in the national living wage.
Businesses in lower-wage sectors, including hospitality, leisure, and retail, have raised concerns about the potential consequences of the government’s moves. The Bank of England has already warned that many employers have put their hiring plans on hold.
What did the ICAEW survey say about UK business confidence?
A recent survey reveals business sentiment in Britain has slumped to a two-year low, with rising fears over new tax policies and Trump’s expanding trade actions.
The Institute of Chartered Accountants in England and Wales warned that the start of the year was “harrowing” for British businesses, highlighting growing threats to the economy.
What did Suren Thiru say about the UK’s economic struggles?
Suren Thiru, the economics director at the ICAEW, stated,
“These figures suggest that this year has so far been a pretty harrowing one for the UK economy as accelerating anxiety over future sales performance, April’s eye-watering tax hike and US tariffs helped push business sentiment into ominous territory.”
He added,
“The mood music on the economy is turning increasingly sour and with forward-looking indicators of sales and employment activity weakening, things may get worse before they get better.”