The official jobless rate came in higher than what analysts had been expecting

London (AFP) - Britain’s unemployment rate rose more than expected to five percent in the third quarter, the highest level since early 2021, official data showed Tuesday ahead of a key UK government budget.

The rate increased from 4.7 percent in the second quarter, the Office for National Statistics (ONS) said, ahead of the Labour government’s annual budget due November 26 which is set to feature tax rises amid weak UK economic growth.

Analysts’ consensus forecast for the third quarter, running from July to September, had been for an increase to 4.9 percent.

“The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months,” ONS director of economic statistics Liz McKeown said in comments accompanying the latest figures.

The data deals a further blow to Prime Minister Keir Starmer’s ruling Labour party, which is trailing badly in popularity polls 16 months after winning a general election.

“There will be no pre-budget comforts that can be taken from today’s employment data,” noted Isaac Stell, an analyst at investment manager Wealth Club.

“Not only has the unemployment rate risen, but wage growth… continues to shrink.”

Stell added that “with speculation around the budget reaching fever pitch, businesses have postponed hiring and are less likely to commit to any form of investment until they know where the economic land lies”.

Analysts said, however, that the weak data increased chances of the Bank of England cutting its main interest rate at its next monetary policy meeting in December, which would ease some pressure.

Finance minister Rachel Reeves has indicated that taxes will rise in the budget to help drive down government debt and to fund public services.