Britain's unemployment rate has reached the highest level since July 2021, official data showed, after businesses were hit by a UK tax rise and US tariffs kicked in.

The rate climbed to 4.6 percent in the three months to the end of April, the Office for National Statistics (ONS) said on Tuesday.

That compared with 4.5 percent in the first quarter of this year, the ONS added.

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

The number of unemployed people stood at approximately 1.6 million as of April.

Despite the rise in unemployment, the employment rate inched up by 0.1 percentage points to 75.1 percent, with the total number of employed individuals reaching 34 million.

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

Weak market

"There continues to be weakening in the labour market, with the number of people on payroll falling notably," said ONS director of economic statistics Liz McKeown.

"Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on."

Analysts said the data, which included slowing growth to wages, would likely see the Bank of England continue to cut interest rates into 2026, weighing on the pound but lifting London's stock market in early trade on Tuesday.

"With payrolls falling, the unemployment rate climbing, and wage growth easing, today's labour market release leaves us more confident in our view that the Bank of England will cut interest rates further than investors expect, to 3.50 percent next year," noted Ruth Gregory, deputy chief UK economist at Capital Economics research group.

The Bank of England last trimmed borrowing costs in May by a quarter point to 4.25 percent.