Bank of England Expects 600,000 U.K. Job Losses

The Bank of England (BOE) said the unemployment rate in the United Kingdom may rise to 5.5 percent in the second quarter of 2025 amid current inflation and economic stagnation.

In its May 2022 Monetary Policy Report, BOE projected consecutive rises in the unemployment rate from 2022 to 2025. MPC data showed a forecast of 3.9 percent unemployment rate in 2023, 4.6 in 2024, and 5.5 in 2025.

In February, BOE recorded a 3.8 percent unemployment rate, resulting in a tighter labor market.

BOE’s recent data showed that over 600,000 people have remained inactive in the labor market compared to before the COVID-19 pandemic. Job vacancies reached a record high in February, and labor inactivity remained elevated.

The war in Ukraine has also worsened household income. According to BOE, household disposable income may fall by 1¾ percent this year.

In March, the UK recorded 7 percent inflation, above its 2 percent target.

BOE said that the inflation rate is expected to reach 10 percent this year amid the war in Ukraine and lockdown in China.

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