LONDON, July 17, 2025 (BSS/AFP) - Britain's unemployment rate has edged upwards to remain near a four-year high, official data showed Thursday with businesses hit by a UK tax hike with US tariffs also kicking in.

The rate climbed to 4.7 percent in the three months to the end of May -- the highest level since June 2021 -- the Office for National Statistics said in a statement.

That compared with 4.6 percent in the February-April period, the ONS added.

Thursday's data covers the start of a hike in business tax laid out in the Labour government's inaugural budget last October.

April also saw the beginning of a baseline 10-percent tariff imposed on the UK and other countries by US President Donald Trump.

Thursday's data also revealed slowing growth in average wages, which firmed expectations that the Bank of England will cut its key interest rate next month.

This despite official data Wednesday showing that British inflation jumped unexpectedly to an 18-month high in June.

"Slowing activity in the labour market, coupled with pay pressures easing, will likely prompt the Bank of England to lower interest rates next month," Yael Selfin, chief economist at KPMG UK, said following the latest unemployment reading.

"With domestic activity remaining sluggish, the... (BoE) will likely want to provide support via looser policy to prevent a more significant deterioration in the labour market."

Recent data showed Britain's economy unexpectedly contracted for a second month running in May, placing strain on Prime Minister Keir Starmer and his government.