No feelgood factor for Reeves as Iran war snuffs out economic upturn

Rise in unemployment and weak pay growth underline how tough this year will be for UK households

• UK unemployment unexpectedly rises to 5%

• Business live – latest updates

News that the UK unemployment rate jumped back to 5% in March appears to be the latest evidence that the Iran war has snuffed out the economic upturn Rachel Reeves had hoped to see in 2026.

The Office for National Statistics reports that, after an unexpected fall in the unemployment rate to 4.9% in last month’s data, it ticked back up to 5% between January and March – the first set of figures affected by the conflict.