Young bearing the brunt of UK tax and wage changes, says BoE economist
The negative effect of a combined increase in employers’ taxes and minimum wages has been “particularly acute” for young people, the Bank of England’s chief economist has warned,Huw Pill said on Tuesday that the increase in national insurance contributions (NICs) from April last year and the government’s efforts to equalise the “national living wage” had caused a particular problem for young people trying to find jobs,Official figures released last week showed that unemployment among 16- to 24-year-olds is higher than the EU average for the first time, rising to 16,1% in the final three months of 2025,This is the highest level, including the pandemic, since 2014, when the jobs market was still recovering from the financial crisis.
Unemployment for the UK as a whole rose to a five-year high of 5.2%, according to figures released last week, but Pill, who was appearing before a Treasury select committee of MPs, said he was particularly concerned about unemployment for young people.“The changes around the ‘national living wage’ and the changes to NICs – both of those have had a particular effect on young people,” he said, later reiterating that it was “particularly acute”.Andrew Bailey, governor of the Bank of England, who appeared alongside Pill at the committee hearing, said: “The youth unemployment rate is around 16% now.That is high, it’s gone up more rapidly than the overall level.
”In her first budget after Labour returned to power in 2024, the chancellor, Rachel Reeves, increased the rate of employers’ national insurance contributions from 13.8% to 15% from last April.The earnings threshold at which NICs is charged for workers aged 21 or over was also cut from £9,100 to £5,000 a year.At the same time, the minimum wage for those aged 21 and over rose by 6.7% and by 16.
3% for 18- to 20-year-olds in April 2025, and will rise again this year,Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less,However, ministers are now considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment,The youth unemployment figures do not include young people who are “economically inactive”, meaning they are not actively looking for work or available to start a job,Just under a million young people are not in education, employment or training, a 26% increase from pre-pandemic levels.
Pill added that there were “deeper structural changes” occurring in the labour market and one of the reasons young people are struggling to find jobs may also be a result of the Covid pandemic.“There are these issues about the long-lasting effects of Covid,” he said.“Having your first job is an important part of being able to enter the labour market and be productive – the more difficult that is, [the more that] can have very long-lasting effects, and they do cross with things like health issues and mental health issues and so forth.”Alan Milburn, a former health secretary, is chairing a government review into the causes of youth unemployment and inactivity and is due to report this summer.He said last week that the rise in youth unemployment posed an “existential” risk for the UK and could put “a generation on the scrapheap”.
“This is not a short-term phenomenon, it’s a long-term one,” Milburn told the BBC.“We’re seeing something dramatic changing in the labour markets.”
Starmer says ‘more to do’ on cost of living despite £117 fall in energy bills from April - business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.Energy bills in Great Britain will fall by £117 to a typical annual bill of £1,641 from April, the regulator Ofgem announced this morning.It announced a 7% reduction of the energy price cap for the period covering 1 April to 30 June.This change amounts to a reduction of about £10 a month for the average household using both electricity and gas, Ofgem said. This is more than £200 lower than a year ago
HSBC bankers to share $3.9bn bonus pot, the highest in more than a decade
Bankers at HSBC are set to share a bonus pot worth $3.9bn (£2.9bn), the highest in more than a decade, after Europe’s largest lender reported better-than-expected annual results.The bonus pool for staff was 10% higher than a year earlier, which the bank said it had determined “based on a review of our performance against financial and non-financial metrics”, while the bank’s chief executive’s pay also rose.It came as Georges Elhedery, who took over as the CEO in 2024, signalled that his sweeping turnaround of the lender was drawing to a close
Signs of psychosis seen in Australian users’ interactions with AI chatbots, expert warns
A leading AI expert has warned some Australians are showing signs of psychosis or mania in their interactions with chatbots, arguing Silicon Valley is being “careless” with the technology amid a pursuit of profit.During an address at the National Press Club on Wednesday, Toby Walsh, scientia professor of artificial intelligence at the University of New South Wales, said he believed the AI race will be both “boom and doom”, with some benefits.But his speech – a copy of which was provided to Guardian Australia – also warned about dangers he said had outraged him since the technology began maturing in recent years.“My childhood dreams are turning into a reality that is both good and bad,” he said in his prepared remarks.Sign up: AU Breaking News emailWalsh’s speech highlighted the legal case against OpenAI by the family of US teenager Adam Raine – along with its data that showed more than a million of its users each week send messages that include “explicit indicators of potential suicidal planning or intent”
Reddit fined £14.5m in UK over use of under-13s’ data
The UK information regulator has fined the social news service Reddit £14.5m for using the data of children under the age of 13 unlawfully and potentially exposing them to inappropriate and harmful content.The hefty punishment from the Information Commissioner’s Office (ICO) is the largest fine yet for a breach of children’s privacy and comes after the US-based company introduced age checks in July, including age verification to access mature content. Prior to this, the ICO said, there were “a large number of children under 13 on the platform and Reddit did not have a lawful basis for processing their personal information”.Reddit asks users to declare their age when opening an account but the ICO said relying on self-declaration presented risks to children as it was easy to bypass
Among the gangsters, gamblers and high rollers: a master bookie’s life in Las Vegas
Forty years ago, the New England Patriots played in their first Super Bowl. It ended disastrously for New England, who lost 46-10 to the Chicago Bears. The Bears’ mammoth defensive tackle, William “The Refrigerator” Perry, even got involved in the scoring with a touchdown.That moment looked like it would cause serious problems for Art Manteris, who at the time ran the sportsbook at Caesars Palace in Las Vegas. Under Manteris, Caesars had offered odds on whether Perry would score during the game – and, as fans scrambled to back the popular player, the house stood to lose a significant sum if he did
The Spin | Zimbabwean breakout at T20 World Cup has fans rejoicing renaissance
Dean du Plessis could tell that Zimbabwean cricket had turned a corner by the noise of the crowd. The veteran broadcaster, who was born blind, has forged a remarkable career as a commentator by distinguishing the game’s almost imperceptible audio shifts. He can tell a slower ball has been bowled by the fractional delay before ball meets bat. He can tell if a batter has pressed forward or back by the scratch of spikes against the hard pitch. And he could tell, in 2018, that the sport he loved would never be the same again
Philippe Gaulier obituary
‘Musicians drank too much and slept on my barn floor’: Andrew Bird on making cult album The Mysterious Production of Eggs
Is the UK’s golden era of free museum entry coming to an end?
The Guide #231: How the hunt for the next James Bond became the franchise’s best marketing tool
My cultural awakening: Operation Mincemeat taught me how to cry – now I sob at everything
From Good Luck, Have Fun, Don’t Die to Tracey Emin: your complete entertainment guide to the week ahead