UK unemployment has risen to its highest level in almost four years, with young people bearing the brunt of a weakening labour market, according to new official figures from the Office for National Statistics.
The unemployment rate climbed to 5.1% in the three months to October, up from 4.3% a year earlier, highlighting a steady rise in the number of people out of work across the country.
The sharpest increase was recorded among 18 to 24-year-olds, with the number of unemployed young people rising by 85,000 over the three-month period. This marks the largest quarterly increase in youth unemployment since November 2022.
The ONS said the figures point to a subdued labour market that is disproportionately affecting younger workers, particularly those trying to enter the workforce or secure early-career roles.
Hiring freezes ahead of Budget
The data covers the period before the recent Budget and reflects widespread caution among employers.
Many businesses delayed recruitment decisions while waiting for clarity on Chancellor Rachel Reeves’s tax and spending plans. Employers have also cited lingering pressures from last year’s Budget, when higher national insurance contributions increased the cost of hiring staff.
Payroll employment declines
The number of employees on company payrolls fell by 149,000 in October compared with a year earlier, a drop of 0.5%.
Liz McKeown, the ONS director of economic statistics, said the figures indicate a weakening labour market, adding that young people have been particularly affected by falling payroll numbers and rising unemployment.
The government has said it will launch an investigation into youth unemployment and economic inactivity in response to the deteriorating figures.
Young jobseekers struggle to break in
For many young people, the slowdown has translated into intense competition for a shrinking number of entry-level jobs.
Meerah Nakaayi, a 22-year-old from London, said she has been out of work since June despite completing a two-year apprenticeship and gaining experience in policy roles.
She described the past six months as frustrating and demotivating, saying one interview panel told her they had received 290 applications for a single policy analyst position, underlining how competitive the market has become.
Employers pull back on entry-level hiring
James Reed, chief executive of Reed Recruitment, said the economics of hiring at entry level are becoming less attractive to employers.
The government has pledged to scrap the two-tier minimum wage and introduce a single adult rate, a move ministers say will improve fairness but which some businesses argue could reduce opportunities for inexperienced workers.
Hospitality sector voices concern
Business leaders in hospitality have warned that policy changes are already discouraging recruitment.
Kris Gumbrell, chief executive of the Brewhouse and Kitchen pub chain, said the sector feels punished by government decisions and that young people are suffering most.
He said a recent front-of-house vacancy attracted 200 applications within hours, but argued that new apprenticeship proposals do not work for hospitality businesses.
Unemployment at post-pandemic high
The 5.1% unemployment rate is the highest since January 2021, just below the peak reached during the Covid-19 pandemic.
While unemployment is rising, wages are still growing faster than inflation, although the pace of pay growth is slowing in parts of the economy.
Wage growth diverges by sector
Average pay, excluding bonuses, rose by 4.6% in the three months to October 2025.
Private-sector wage growth slowed from 4.2% to 3.9%, while public-sector earnings growth accelerated sharply from 6.6% to 7.6%, reflecting pay deals that took effect earlier this year.
Interest rate decision looms
The latest labour market data comes ahead of a key interest rate decision by the Bank of England, which is due to decide whether to cut rates or hold them at 4%.
Yael Selfin, chief economist at KPMG UK, said the weakening jobs market could justify a rate cut later this week.
However, inflation remains close to double the Bank’s 2% target, complicating the decision. Lower interest rates could support growth but risk reigniting price pressures.
Richard Carter, head of fixed interest research at Quilter Cheviot, said the Bank is walking a tightrope between boosting growth and keeping inflation on a downward path.
Political reaction intensifies
Work and Pensions Secretary Pat McFadden said the figures underline the scale of the challenge facing the government.
He said ministers are investing £1.5bn to deliver 50,000 apprenticeships and 350,000 workplace opportunities for young people, aimed at giving them experience and a route into employment.
Shadow work and pensions secretary Helen Whately accused the government of pursuing growth-killing policies, warning that rising unemployment will leave thousands of families struggling through Christmas and into the New Year.
Questions over data quality
ONS labour market statistics play a central role in shaping government policy and Bank of England interest rate decisions, but the agency has faced criticism over data quality.
A recent review highlighted challenges caused by tight budgets and low response rates to surveys, particularly the Labour Force Survey.
Only around one in four businesses now respond to the employment survey, raising concerns about the reliability of some labour market estimates at a critical time for economic decision-making.
