The UK unemployment rate has increased to 5% in the three months to March, up from 4.9% in the previous quarter, while job vacancies fell to 705,000, the lowest level in five years.Analysts attribute the rise in unemployment to the initial economic impacts of the ongoing conflict in Iran and global economic pressures.

Sectors such as hospitality and retail have seen significant reductions in vacancies and payroll employment, reflecting the strain on businesses from higher labour costs and inflation.Average wage growth slowed to 3.4%, marginally above inflation, which is expected to keep household spending subdued.The Bank of England may have more time to consider interest rate changes as economic pressures evolve.Youth unemployment is particularly concerning, reaching 14.7%, the highest since 2014.

Research from the Institute for Fiscal Studies indicates that the decline in youth employment is nearing levels seen during the 2008 financial crisis and the COVID-19 pandemic, raising worries about long-term consequences for young people entering the labour market.

Experts highlight the importance of understanding the factors driving youth disengagement from work and education, including mental health challenges.