The UK’s unemployment rate has risen further, with official figures showing young people being particularly hard hit by the jump in job cuts under Labour.
Figures from the Office for National Statistics (ONS) showed the jobless rate hit 5.1% in the three months to October – a period dominated again by talk of a tough budget ahead.
That was up from the 5% level reported a month ago.
It had stood at 4.1% when Labour took office in 2024, promising a focus on growing the economy and protecting “working people” from tough fiscal choices.
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ONS director of economic statistics Liz McKeown said: “The overall picture continues to be of a weakening labour market. The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.
“This weakness is also reflected in an increase in the unemployment rate, while vacancies remained broadly flat. The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.
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“Wage growth slowed further in the private sector, while increasing again in the public sector, reflecting the continued impact of some pay rises being awarded earlier than they were last year.”
The ONS highlighted a youth unemployment rate of 16%.
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The data was released against the backdrop of a continuing investigation into the sources of leaks ahead of the chancellor’s second budget, with the countdown dominated by talk of pain ahead including income tax hikes.
Economists and private sector surveys have blamed months of budget speculation for forcing business and consumer spending into a form of hibernation.
This comes on top of a backlash among employers to Rachel Reeves’s first budget that saw business placed on the hook for £25bn of additional national insurance contributions – costs which have underpinned the UK’s stubbornly high level of inflation.
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It also raised minimum wage levels at inflation-busting rates – rates that were further upwardly adjusted on 26 November.
Early data released by the ONS showed that the number of payrolled employees in the labour market had fallen by more than 200,000 since the chancellor’s first budget – a number that is subject to future revision.
Secretary of State for Work and Pensions, Pat McFadden said: “There are over 350,000 more people in work this year and the rate of inactivity is at its joint lowest in over five years, but today’s figures underline the scale of the challenge we’ve inherited.
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“That is why we are investing £1.5 billion to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.
“To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work.”
The weak labour market data adds weight to expectations of an interest rate cut by the Bank of England this week.
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The vast majority of financial market participants and economists forecast a reduction to 3.75% – a near three-year low – from 4%.
They say that rather than being allowed by an easing in inflation, the recent monthly contractions in UK economic growth and rising jobless rate give policymakers the scope to cut due to weak demand.
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Liberal Democrat deputy leader and economy spokesperson, Daisy Cooper, said: “The government says it’s on the side of working people but it’s workers and jobseekers who are paying the price of their failures.
“For people worried about their job, these figures are the last thing they want to see before Christmas.
“From the jobs tax to the betrayal on business rates, businesses are struggling to stay afloat under the massive tax increases imposed by this government which are making it more expensive to employ people.
“The chancellor must take this as a wake up call and reverse the jobs tax before it can do any more damage,” she said.
