Britain’s unemployment rate has reached the highest level since August 2021, official data showed Tuesday, with businesses facing a UK tax hike and US tariffs.

The rate climbed to 4.5 percent in the first quarter, the Office for National Statistics said in a statement.

That compared with 4.4 percent for the three months to the end of February, the ONS added.

Tuesday’s data covers the period before April’s introduction of a hike to a business tax laid out in the Labour government’s maiden budget in October.

It also precedes a baseline 10-percent tariff imposed on the UK and other countries by US President Donald Trump last month.

“The broader picture continues to be of the (UK) labour market cooling, with the number of employees on payroll falling in the first quarter of the year,” noted Liz McKeown, ONS director of economic statistics.

“Wage growth slowed slightly in the latest period but remains relatively strong, with public and private sectors… showing little difference,” she added.

Analysts said the data would likely see the Bank of England cut its key interest rate a further two times this year, having reduced borrowing costs twice already in 2025.

“While the jobs market weakened further, this isn’t feeding through to a marked easing in pay growth,” noted Ruth Gregory, deputy chief UK economist at Capital Economics.

“That will probably keep the Bank of England cutting interest rates at the current pace of once every quarter.”

She added that “further softening in employment in April suggests businesses continued to respond to the rise in business taxes and the minimum wage by reducing headcount”.