LONDON, June 18, 2026 (BSS/AFP) - Britain's unemployment rate dipped in the three months to the end of April, official data showed Thursday, as the Bank of England prepares to keep its benchmark interest rate steady.

The jobless rate eased to 4.9 percent in the period, after 5.0 percent in the first quarter, the Office for National Statistics (ONS) said in a statement.

The Bank of England is widely expected to maintain borrowing costs at 3.75 percent in a decision due Thursday, opting against an increase despite elevated UK inflation after the US-Iran war pushed up energy prices.

Britain is also holding a key local election on Thursday that could trigger the endgame for Labour leader Keir Starmer's beleaguered premiership, or win him a reprieve.

The ONS's director of economic statistics, Liz McKeown, said Britain's labour market "remained broadly stable" as payroll numbers fell further and amid signs of some workers moving into self-employment.

She added that vacancies also continued to fall and that regular wages growth in the private sector slowed to its lowest rate in five and a half years.

The youth unemployment rate held steady at more than 16 percent, the ONS said.

A government-commissioned review last month warned that Britain risked creating a "lost generation" as the number of 16- to 24-year-olds not in employment, education or training topped one million in the first quarter of the year.

The unemployment figures followed official data Wednesday showing that the annual inflation rate remained at 2.8 percent in May.

Britain's economy contracted slightly in April as the Middle East war hit growth.

While that conflict appears close to being over, fighting within Britain's Labour party is clouding the outlook for the the country's economy.

Labour party veteran and Greater Manchester mayor Andy Burnham is looking to win the parliamentary by-election for the Makerfield constituency in northwestern England on Thursday, so that he can then try to replace Starmer as prime minister.

Starmer, in power since July 2024, has been clinging by his fingernails since centre-left Labour suffered a drubbing in local and regional elections last month.

He has been rocked by several policy U-turns and a scandal over his appointment of Peter Mandelson, a former associate of convicted sex offender Jeffrey Epstein, as the UK's ambassador to Washington.