According to data released on Tuesday by the Office for National Statistics, UK unemployment rose to a four-year high in April as employers readied for the sharp increases to employer national insurance contributions and the minimum wage. The month-on-month drop of 55,000 people in paid employment led to an unemployment rate of 4.6%, in line with analyst’s expectations. In immediate reaction, the pound fell 0.7% against the dollar, before regaining some ground in the afternoon to settle around 0.3% down at $1.351. Traders are now pricing in one Bank of England rate cut in September, compared to the previous expectation of November. The Monetary Policy Committee’s next meeting is next week.
The month-on-month drop of 55,000 people in paid employment led to an unemployment rate of 4.6%, in line with analyst’s expectations.
In the perfect storm of President Trump’s trade war affecting exports and tax increases impacting the services sector, the UK economy suffered a monthly contraction of 0.3% in April, the steepest decline since October 2023 and far worse than the 0.1% forecast by analysts as polled by Reuters. The services sector fell 0.4%, as the end of the stamp duty break impacted on estate agents and conveyancers. The value of goods exported to the US plummeted as activity had been brought forward to March to avoid tariffs that took effect in April. The data was released after Rachel Reeves’ government spending review, raising the prospect that the Labour government may be forced to increase taxes in the Autumn budget.
The services sector fell 0.4%, as the end of the stamp duty break impacted on estate agents and conveyancers. The value of goods exported to the US plummeted as activity had been brought forward to March to avoid tariffs that took effect in April.
UK discount chain Poundland has been sold for less than its namesake to specialist investor Gordon Brothers, as parent company Warsaw-listed Pepco Group has struggled following changes to its product ranges, stiff competition from other discount retailers, and rising costs which forced it to abandon its “everything for £1” pricing strategy. The retailer was sold for the nominal value of EUR1 (or 85p) and the new owner will support the business through rolling over an existing secured loan of £30m and providing a new overdraft of £30m following completion of a proposed restructure plan. It is anticipated that some of the 825 stores will have to be closed, putting some of the 16,000 UK jobs at risk.
Our specialist's final thought
"UK discount chain Poundland has been sold for less than its namesake to specialist investor Gordon Brothers, as parent company Warsaw-listed Pepco Group has struggled following changes to its product ranges, stiff competition from other discount retailers, and rising costs which forced it to abandon its “everything for £1” pricing strategy."
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