Early HMRC information shows UK payrolled employment fell by 109,000 (-0.4%) in May 2025, the sharpest monthly decline for four years. The drop pushed the unemployment rate up to 4.6%, its highest level since April 2021.
Economists have pointed to the 1.2-percentage-point rise in employer National Insurance from 13.8% to 15% on 6 April as a key factor. Hospitality shed 5.6% of roles, IT and telecoms 3.4%, and retail 2.4%, contributing to an overall 0.9% fall in employment.
London recorded the steepest regional contraction, with payroll numbers down 2.3%, while the Scottish Borders and parts of East Anglia also suffered marked losses. Vacancies slipped by 63,000 to 736,000, yet shortages persist in accountancy, construction and health, keeping competition for skilled staff intense.
Average regular pay grew 5.2% in the three months to April, only marginally slower than March’s 5.5%, leaving the Bank of England alert to wage-pressure risks as it considers further interest rate cuts later this year.
The Office for National Statistics cautioned that the payroll figures remain provisional and could be substantially revised when additional real-time submissions arrive next month.
Kate Nicholls, chief executive of UKHospitality, said:
“Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted by the Government’s own fiscal watchdog, major banks, and countless business groups.”
Daniel Herring, head of fiscal and economic policy at the Centre for Policy Studies, added:
“The provisional employment data confirms our concerns about Labour’s job tax. When you make it 11% more expensive to hire minimum wage workers, businesses simply stop hiring.”
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