The UK's unemployment rate has climbed for a second consecutive period, with new official data revealing a sharp increase in joblessness among young people.
Labour Market Weakens as Unemployment Rises
Figures released by the Office for National Statistics (ONS) show the unemployment rate reached 5.1% for the three months leading to October 2025. This marks a rise from the 5% recorded in the previous month and a significant jump from the 4.1% level when the Labour government took office in 2024.
Liz McKeown, ONS Director of Economic Statistics, stated the data paints a clear picture of a deteriorating jobs market. "The overall picture continues to be of a weakening labour market," she said. "The number of employees on payroll has fallen again, reflecting subdued hiring activity."
Young Workers Bear the Brunt of Job Cuts
The statistics highlight a particularly severe impact on younger age groups. The ONS reported a youth unemployment rate of 16%, indicating that one in six young people in the labour force is now out of work. McKeown confirmed that the fall in payroll numbers and the rise in unemployment "has been seen particularly among some younger age groups."
Wage growth presents a mixed picture. While pay increases have slowed further in the private sector, public sector wage growth has risen. The ONS attributes this public sector increase to the continued impact of some pay awards being implemented earlier than in the previous year.
Economic Backdrop of Budget Leaks and Business Costs
The latest labour market data arrives amidst a tense economic climate, dominated by speculation ahead of the Chancellor's second budget. An ongoing investigation into pre-budget leaks has unfolded alongside forecasts of potential income tax hikes.
Economists point to months of uncertainty over fiscal policy as a key factor forcing both businesses and consumers to curb spending, effectively entering a state of economic hibernation.
This follows a backlash from employers to Chancellor Rachel Reeves's first budget, which placed an additional £25 billion in national insurance contributions on businesses. These increased costs are cited as a contributor to the UK's persistently high inflation. Furthermore, recent inflation-busting increases to the national minimum wage, which were adjusted upwards again on 26 November, have added to employer cost pressures.
The ONS noted that job vacancies have remained broadly flat, signalling a lack of new opportunities in the market as the UK economy faces continued headwinds.
