Aberdeen: Financial markets will ignore the UK's remarkable unemployment rates

21 april 2026

Verenigd Koninkrijk Arbeidsmarkt

Luke Bartholomew, Senior Deputy Economist at Aberdeen, comments on the unemployment rates in the UK:

'While the sharp drop in unemployment reported today is certainly eye catching, it will probably be largely dismissed by the market. That’s partly because it only covers a period up to the end of February, so before the Iran conflict, and also because it largely seems to reflect rising inactivity rather than stronger hiring.

Indeed, the timelier payrolls data, which covers March and so should capture some of the early impact of the war, remains weak, falling once again. Meanwhile, with cash wages continuing to moderate and inflation set to increase sharply in the coming months, it is likely households are about to experience another period of negative real wage growth, which will weigh further on growth.

Tomorrow’s inflation data will help give a sense of how quickly the energy price shock is working its way through the economy, but unless there is a much larger and broader than expected surge in price pressures, then the Bank of England will likely keep rates on hold later this month.'