U.K. Unemployment Rises to 5.0%, Raising Questions Over Bank of England Rate Hike Need

According to Dutch bank ING analyst James Smith on May 19, the U.K. unemployment rate rose to 5.0% as of March, with payroll employment declining sharply and wage growth slowing. Smith noted that weakness has concentrated in consumer-facing sectors hit hardest by last year’s tax increases and minimum wage hikes. Against this backdrop, the economic environment appears less vulnerable to a second wave of inflation from energy price shocks, making Bank of England rate hikes uncertain. “We still forecast a rate hike in June, but it is far from assured,” Smith said.