UK Jobless Rate Hits Highest Level Since Pandemic as Labour Market Weakens
Britain’s unemployment situation has deteriorated to its worst point since the COVID-19 pandemic, according to new figures that reveal ongoing challenges in the employment sector despite monetary policy adjustments.
Data released by the Office for National Statistics shows the unemployment rate reached 5.0% in July to September 2025, marking an increase from the previous quarter and representing levels above those recorded a year earlier.
The employment landscape continues to contract, with payrolled employees declining by 32,000 between August and September 2025.
Preliminary data suggests this downward trend persisted, though such early estimates typically undergo revision in subsequent reports.
Job vacancies remained broadly stable, with only a modest increase of 2,000 positions recorded in the August to October period, bringing the total to 723,000.
Wage growth has shown signs of moderating. Average regular earnings rose 4.6% annually in July to September 2025, while total earnings including bonuses increased by 4.8%.
These figures remain elevated compared to inflation targets set by central bank officials.
The public sector experienced notably stronger pay growth at 6.6% compared to the private sector’s 4.2% though timing differences in pay settlements may have influenced this gap.
Michael Kill, CEO, Night Time Industries Association:
“The latest ONS figures are deeply concerning. A rise in unemployment to 5%, the highest in four years, is a stark signal that the Government’s current approach is failing to support job – particularly in sectors like hospitality, leisure, and night-time industries, which have been hit hardest by the national insurance increase and the rising national living wage.
“Economists have long warned that April’s £25bn hike in employer National Insurance contributions would squeeze firms’ payrolls and stall hiring, and these numbers confirm their fears. HMRC data showing a fall of 180,000 workers on company payrolls in the last year underlines that businesses are already under significant pressure.
“The Government must recognise that these policy choices are not neutral—they have real consequences for employment. Increasing taxation on businesses during a slowdown risks further job losses and threatens the recovery of the sectors that employ millions of workers. If the Chancellor proceeds with further tax rises in the upcoming budget, it will only exacerbate the problem, discouraging investment and undermining economic growth at a time when jobs are already under threat.
“We urge policymakers to reconsider the trajectory of taxation on businesses and to take a measured approach that protects jobs, supports growth, and allows the UK’s economy – and its workforce – to thrive.”
Liz McKeown, who leads economic statistics at the ONS, characterized the data as indicating labour market weakening, noting that payroll numbers have declined across most recent monthly periods based on updated tax information.
The statistics arrive at a sensitive moment for economic policymakers, who must balance concerns about price stability against employment objectives. Some monetary policy officials have maintained focus on inflation risks despite rising joblessness.
The government’s Office for Budget Responsibility will likely scrutinize these figures as they prepare fiscal forecasts, particularly given that unemployment has climbed steadily from 4.4% seven months prior.
Work and Pensions Secretary Pat McFadden acknowledged the challenges, stating that while over 329,000 additional people entered employment this year, the data reinforces the need for comprehensive employment initiatives. He referenced plans to modernize job centres, expand youth support services, and address health-related barriers to work through enhanced employer partnerships.
The employment rate for working-age adults stood at 75.0% in July to September 2025, showing a quarterly decline though remaining above year-ago levels