UK Unemployment Rate Rises to 5.1% with Young People Worst Affected
The UK unemployment rate rose to 5.1% in the three months to October 2025, marking the highest level in four years and an increase from 5.0% previously. When Labour took office in 2024, the unemployment rate stood at 4.1%. Payroll employment declined, with 149,000 fewer jobs year on year and a drop of 22,000 in October alone. Overall, payrolled employees fell to 30.3 million in November 2025, down 171,000 year on year and 38,000 month on month. Vacancies remained broadly flat while hiring activity stayed subdued. The declines in employment were particularly marked among younger age groups.
Average regular earnings growth excluding bonuses was 4.6% in the August–October 2025 quarter, with total pay growth including bonuses at 4.7%. Public sector pay growth was notably higher at 7.6%, compared to 3.9% in the private sector, partly due to earlier pay rises in 2025. Wage growth slowed in the private sector but increased in the public sector as a result of previous pay awards.
The softer wage growth and falling payrolls have contributed to expectations of a potential Bank of England interest rate cut. Economic context includes ongoing speculation around fiscal policy, with talk of the Chancellor's second budget involving potential income tax hikes and £25 billion in additional national insurance contributions for businesses. Some economists suggest that budget speculation has dampened business and consumer spending, which is linked to persistent inflation. This data release comes amid a leaks investigation related to fiscal policies and economic conditions.
