Business

UK unemployment set to hit five-year high as tax rises begin to bite, EY warns

Published

2 days ago

2 February 2026

UK unemployment is expected to rise to its highest level in five years in 2026 as previously announced tax increases begin to weigh on growth and hiring, according to new forecasts from the EY Item Club.

The forecasters warned that joblessness could peak at 5.2 per cent in the first half of this year, up from the current 5.1 per cent and the highest level since January 2021, as modest economic growth is constrained by tighter fiscal policy and global uncertainty.

The EY Item Club said tax rises announced by Rachel Reeves in her first Budget are set to have a more pronounced impact this year, dampening both consumer spending and business investment. Employers were already hit by a £25 billion increase in national insurance contributions last spring, a move that business groups have warned would curb hiring.

Matt Swannell, chief economic adviser to the EY Item Club, said the effects of fiscal tightening are only now starting to filter through the economy.

“Further tax rises may not be expected in 2026, but previously announced measures will begin to raise revenues,” he said. “At the same time, the government will need to rein in borrowing and keep public spending broadly flat to meet its fiscal rules.

“This tightening of fiscal policy, alongside ongoing global uncertainty, is expected to drag on UK growth over the next year or so.”

Economic growth is forecast to remain subdued. The EY Item Club now expects UK GDP to grow by 0.9 per cent this year — slightly higher than its previous estimate of 0.8 per cent, but still weaker than in 2025. Growth is then projected to recover modestly to 1.3 per cent in 2027 and 1.4 per cent in 2028.

Reeves announced a further £26 billion of tax increases in last November’s Budget, although, as with her earlier package, many of those measures will not take effect for several years. Even so, the cumulative impact of higher taxes is expected to weigh on confidence.

The EY Item Club said global risks remain a major headwind. Trade tensions and tariff disruption, particularly linked to the policies of Donald Trump, are expected to continue undermining private sector sentiment.

Financial markets were unsettled in January after Trump tested Nato alliances and announced plans to nominate Kevin Warsh as the next chair of the Federal Reserve, adding volatility to currency and commodities markets. Concerns have also lingered around inflation and public spending commitments in major economies, including Japan.

On monetary policy, the EY Item Club expects the Bank of England to hold interest rates steady at its meeting this week, before cutting again in April. Rates were reduced four times last year, falling from 4.75 per cent to 3.75 per cent.

Despite slower growth and rising unemployment, pay growth is expected to remain relatively resilient. The EY Item Club forecasts average salaries will rise by around 3 per cent this year, though that will translate into only modest improvements in living standards as higher taxes and prices continue to erode household incomes.

The outlook suggests that while a deep recession is not expected, the UK faces a period of weaker growth and rising labour market pressure as fiscal tightening and global uncertainty converge.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

Business

PAMT CORP: Pain Is Likely To Continue Near-Term (Downgrade)

Published

5 minutes ago

4 February 2026

NewsAdmin

PAMT CORP: Pain Is Likely To Continue Near-Term (Downgrade)

Business

From Pixar to Disney+: The $100-billion blueprint behind Bob Iger’s Disney

Published

13 minutes ago

4 February 2026

NewsAdmin

From Pixar to Disney+: The $100-billion blueprint behind Bob Iger’s Disney

When Bob Iger was promoted to chief executive officer of Walt Disney Co in 2005, he took over a company that was an undeniable force in entertainment and theme parks, but badly in need of rejuvenation.

In one of his first moves, Iger made Disney shows like Lost and Desperate Housewives available for sale on Apple ‘s iTunes platform, ushering in the unique idea of watching TV online. Three months later he bought Pixar from Apple co-founder Steve Jobs. That $7.4 billion deal was an eye-popper, paving the way for blockbusters like Cars and Inside Out that reinvigorated Disney’s animated film business.

Those early moves hinted at key parts of Iger’s strategy: acquire marquee entertainment franchises and find new ways to exploit them. As he prepares to hand the reins next month to his successor, theme-parks chief Josh D’Amaro, Iger leaves a legacy that includes snapping up the biggest brand names in Hollywood via more than $100 billion in mergers and acquisitions, expanding in China and building a streaming business that delivered $24.6 billion in revenue from people watching movies and TV shows online last year.

“That’s one huge insight of his,” said David Collis, an executive education fellow at Harvard Business School who has written about Iger. “If you own these incredible entertainment franchises, any device only increases demand for your content.”

More deals followed Pixar, including Marvel Entertainment and its stable of superheroes, Star Wars-parent Lucasfilm and the $71 billion acquisition of 21st Century Fox in 2019, which brought in franchises like The Simpsons and Avatar.

“The deal we did for Fox, in many ways, was ahead of its time,” Iger said this week on an earnings call when asked about Netflix’s pending acquisition of Warner Bros Discovery.
Those acquired characters and stories found their way into Disney’s theme parks. In 2013, when the company first began exploring a Star Wars land for the parks, Iger told his designers, “Be the most ambitious that you have ever been,” Bob Weis, the longtime head of Disney’s parks design business, recalled in his 2024 autobiography.Iger was also keen on international expansion, green-lighting the $5.4 billion Shanghai Disneyland. Before its 2016 opening, Iger flew to China on a nearly monthly basis to monitor its progress, according to Weis.

The same year the Fox acquisition closed, Iger launched Disney+, the company’s flagship streaming service, the company’s response to the growing dominance of Netflix in online viewing. Providing a new outlet for programming that ran on networks like the Disney Channel was a threat to the company’s lucrative cable-TV business, but in the end, Iger relented.

Disney+ was a hit from the start. Ten million customers signed up the first day, driven by programming such as the Star Wars-spinoff The Mandalorian. The company reported 132 million Disney+ subscribers at the end of its latest fiscal year.

TV Star
Iger has spent his whole career in the TV business, rising up the ranks at ABC and performing every task, from getting a bottle of Listerine for Frank Sinatra before a TV special to scheduling the 1988 Winter Olympics. He was considered a likely CEO of broadcaster Capital Cities/ABC until that company was acquired by Disney in 1996 and he had to start clawing his way up the corporate ladder again.

When a shareholder revolt finally prompted the retirement of Disney CEO Michael Eisner in 2005, Iger got his shot.

More than 20 years later, the worst grade on Iger’s corporate report card likely comes in succession planning. Multiple extensions of his contract over the years led senior Disney executives to exit. When he finally stepped down for the first time in 2020, his handpicked successor Bob Chapek proved to be disappointment.

As Iger prepares to pass the baton to D’Amaro on March 18, he leaves plenty of work still to be done. On the recent earnings call, Iger said he hoped his replacement would carry on with his focus on reinvention.