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UK Unemployment Rises to Five-Year High Amid Signs of Labour Market Weakening

The UK’s unemployment rate has risen to 5% in the three months to September, reaching its highest level since December 2020 to February 2021, according to official figures from the Office for National Statistics (ONS). Analysts had expected a smaller increase, projecting a rate of 4.9% ahead of the Chancellor’s Budget on 26 November.

Average wage growth slowed slightly, with pay rising 4.6% in the third quarter, down from 4.7% in the three months to August. ONS director of economic statistics Liz McKeown said the combination of figures points to a weakening labour market. She noted that while unemployment has climbed to a post-pandemic high, the number of job vacancies remained broadly stable.

The ONS cautioned that the unemployment rate should be interpreted carefully and is taking steps to improve the quality of its data. The Bank of England has projected unemployment will remain around 5% in the coming years. The Monetary Policy Committee is set to meet on 18 December to consider a potential interest rate cut, with some analysts suggesting the latest unemployment figures could influence their decision.

Danni Hewson, head of financial analysis at AJ Bell, said expectations of a rate cut have risen sharply but added that clarity on the Chancellor’s full Budget plans is essential before any conclusions are drawn.

Work and Pensions Secretary Pat McFadden acknowledged challenges in the labour market but emphasized that the economy is still generating jobs. He highlighted concerns over the rising number of young people not in employment or training over the past five years.

The Conservative shadow work and pensions secretary, Helen Whately, blamed government policies for reducing job opportunities. She said the rise in unemployment leaves thousands of families without a reliable income, citing higher taxes, regulatory burdens, and weakened business confidence as contributing factors.

Early estimates show the number of people on company payrolls fell by 180,000 in the year to October, a drop of 0.6%, exceeding forecasters’ predictions. Job vacancies, however, increased slightly by 2,000 to 723,000 between August and October, marking the first quarterly rise in more than three years after a steady decline from a peak of 1.3 million in early 2022.

The ONS data also reveals a gap in pay growth between sectors. Public sector wages rose 6.6%, while private sector pay increased 4.2%. Yael Selfin, chief economist at KPMG UK, said public sector pay growth is likely to peak as large increases from last year are not expected to continue amid budget pressures. Private sector wage growth is anticipated to fall as more people compete for work, weakening workers’ bargaining power.

Richard Carter of Quilter Cheviot suggested many businesses have delayed hiring ahead of the Budget, citing concerns over previous national insurance hikes and potential future costs. Tina McKenzie of the Federation of Small Businesses said the rise in unemployment highlights the government’s complacency toward jobs and small enterprises, adding that regulatory and tax burdens continue to hinder employment growth.

The latest figures indicate a fragile labour market, with slower wage growth and declining payroll numbers raising concerns as policymakers prepare for the upcoming Budget.

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Fraudsters are increasingly using AI-generated images and videos to trick people into handing over sensitive personal and financial information, according to FraudSMART, the financial crime awareness initiative operated by the Banking and Payments Federation Ireland (BPFI). The organisation has reported a rise in online adverts promoting fake, State-backed investment schemes. These scams often use fabricated images of well-known politicians and business figures to make the offers appear legitimate and encourage users to click on registration links. Niamh Davenport, head of financial crime at BPFI, said scammers are deliberately exploiting recent media coverage of a planned State-backed savings and investment scheme to give their frauds a sense of credibility. “They often claim the scheme is open to everyone, but that places are limited and being ‘snapped up’ fast, in order to pressure people to act quickly,” she said. “They typically promise guaranteed returns or a guaranteed monthly income.” FraudSMART said that while anyone can be targeted, people in their early 50s are particularly vulnerable to investment scams. This age group is often focused on retirement planning, making them more receptive to financial offers that appear secure or high-yield. According to the organisation, most scams follow a similar pattern. Victims are first directed to click a registration link and complete a short online form providing their contact details. They are then contacted by someone posing as a financial adviser, who urges them to make an immediate “security deposit” to secure participation in the scheme. Once a payment is made, the money is quickly moved through multiple accounts, often overseas, making recovery extremely difficult. Davenport warned that scammers are becoming more sophisticated in their use of technology, particularly AI tools that allow them to create realistic but entirely fake promotional content. These materials are designed to mimic legitimate financial advertisements and build trust with potential victims. Recent figures from An Garda Síochána show investment fraud rose by 20% last year, with losses exceeding €20 million. The scale of individual scams varies widely, ranging from smaller crypto-related frauds involving a few hundred euro to large-scale investment schemes where victims lose tens of thousands. FraudSMART is urging the public to remain cautious when encountering online investment advertisements, especially those promising guaranteed returns or requiring urgent action. It also advises consumers to avoid sharing personal information with unverified sources and to be wary of pressure tactics designed to rush financial decisions. Authorities continue to warn that fraudsters are adapting quickly, using advanced digital tools to target victims across multiple platforms.

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Fraudsters are increasingly using AI-generated images and videos to trick people into handing over sensitive personal and financial information, according to FraudSMART, the financial crime awareness initiative operated by the Banking and Payments Federation Ireland (BPFI). The organisation has reported a rise in online adverts promoting fake, State-backed investment schemes. These scams often use fabricated images of well-known politicians and business figures to make the offers appear legitimate and encourage users to click on registration links. Niamh Davenport, head of financial crime at BPFI, said scammers are deliberately exploiting recent media coverage of a planned State-backed savings and investment scheme to give their frauds a sense of credibility. “They often claim the scheme is open to everyone, but that places are limited and being ‘snapped up’ fast, in order to pressure people to act quickly,” she said. “They typically promise guaranteed returns or a guaranteed monthly income.” FraudSMART said that while anyone can be targeted, people in their early 50s are particularly vulnerable to investment scams. This age group is often focused on retirement planning, making them more receptive to financial offers that appear secure or high-yield. According to the organisation, most scams follow a similar pattern. Victims are first directed to click a registration link and complete a short online form providing their contact details. They are then contacted by someone posing as a financial adviser, who urges them to make an immediate “security deposit” to secure participation in the scheme. Once a payment is made, the money is quickly moved through multiple accounts, often overseas, making recovery extremely difficult. Davenport warned that scammers are becoming more sophisticated in their use of technology, particularly AI tools that allow them to create realistic but entirely fake promotional content. These materials are designed to mimic legitimate financial advertisements and build trust with potential victims. Recent figures from An Garda Síochána show investment fraud rose by 20% last year, with losses exceeding €20 million. The scale of individual scams varies widely, ranging from smaller crypto-related frauds involving a few hundred euro to large-scale investment schemes where victims lose tens of thousands. FraudSMART is urging the public to remain cautious when encountering online investment advertisements, especially those promising guaranteed returns or requiring urgent action. It also advises consumers to avoid sharing personal information with unverified sources and to be wary of pressure tactics designed to rush financial decisions. Authorities continue to warn that fraudsters are adapting quickly, using advanced digital tools to target victims across multiple platforms.

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