The UK unemployment rate unexpectedly rose to 5% in the latest quarter, while employment fell by 100,000 – the largest drop in six years. The figures, which also showed slowing wage growth, have led economists to suggest that a June interest rate hike is now less likely.
The Office for Budget Responsibility (OBR) has warned that the UK faces a long-term financial sustainability issue. Professor David Miles, a senior OBR member, told the Treasury Select Committee that government debt could exceed 270% of GDP by the early 2070s under current policies, calling it a “huge issue” that successive governments have failed to address. He added that the OBR may need to “spell out even more starkly” the consequences of ignoring unsustainable debt levels.
In other developments, G7 finance ministers meeting in Paris issued a joint statement calling for the immediate reopening of the Strait of Hormuz and agreed on the need to address global trade imbalances. French finance minister Roland Lescure highlighted that imbalances between China, the US, and Europe are unsustainable and risk financial market turbulence.
Oil prices fell after US President Donald Trump paused a planned attack on Iran, with Brent crude dropping 1.56% to $110.35 a barrel. On Wall Street, stocks opened lower, while the FTSE 100 in London remained flat. UK government bond yields edged higher, with the 10-year gilt yield rising by 2 basis points.
