Unemployment set to rise above pandemic peak by spring, JP Morgan warns
Unemployment across Britain looks set to rise to 5.5 per cent by late spring, economists at JP Morgan have warned. At 5.5 per cent, Britain's unemployment rate would be higher than at the peak of the Covid-19 pandemic in December 2020, when it hit 5.3 per cent, or 1.8million people. In its worst forecast scenario, Britain's unemployment rate could climb further to 6 per cent by the end of this year, the research note by JP Morgan added. Swathes of employers are axing jobs, failing to rehire after people leave and looking to cut costs following Rachel Reeves' £25billion raid on employers’ national insurance contributions, which kicked in from April 2025.Allan Monks, chief UK economist at JP Morgan, said: 'Over a year has passed since the tax hike and the jobs market is still stagnating'. The growth of artificial intelligence is also dampening employers' hiring plans.Monks said: 'Sectors which may be more exposed to AI adoption (eg business services and finance) continue to look relatively weak'. Warning: Unemployment across Britain looks set to rise to 5.5% by late spring, economists at JP Morgan have warned.JP Morgan's research note claimed that if unemployment continued to rise in the second half of the year, it would 'likely have significant consequences for household confidence, growth and BoE rates'. It added: 'Our forecast for the BoE to hold rates after the summer hence rests on a clear pickup in job growth. There is no clear evidence of that happening at the moment'. Monks said Britain's sluggish jobs market would force the Bank of England to increase the pace of interest rate cuts, predicting two more reductions by June to 3.25 per cent, from the current level of 3.75 per cent. Forecasts: JP Morgan's forecast for Britain's unemployment levels The Bank of England held interest rates at its latest meeting earlier this month in a 5-4 vote. Alan Taylor, a Bank of England rate-setter who voted for an immediate cut to 3.5 per cent, believed that 'two to three' more cuts were needed to boost the economy, which he said was on a 'weaker path'. Despite the bleak outlook, Monks believed employers would regain their confidence and start hiring later this year. Unemployment in Britain increased to its highest rate in nearly five years at the end of 2025, official figures published last week showed.Britain's unemployment rate rose to 5.2 per cent in the three months to December, from 5.1 per cent in the three months to November, the Office for National Statistics said.Young people are bearing the brunt, with unemployment for those aged between 16 and 24 rising to 16.1 per cent, its highest in more than a decade, the ONS said.The Conservatives said Labour had overseen 'an unprecedented series of monthly unemployment increases' which were the 'predictable result of bad decisions and economic incompetence'. This week, findings from job search site Adzuna suggested the number of job vacancies in Britain had fallen to the lowest level in five years.The number of jobs being advertised dropped by 3 per cent in January to 695,000, according to Adzuna, marking the first time advertised vacancies have dropped below 700,000 since January 2021.Graduate jobs fell below 10,000 for the first time since Adzuna began tracking this in 2016.The decline in the number of vacancies marked a continuation in the downward trend seen late last year and showed a 16 per cent downturn compared with January 2025 and a near-20 per cent fall since six months earlier. DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Unemployment set to rise above pandemic peak by spring, JP Morgan warns
