UK unemployment rose to four-year high of 5.1% before budget | UK unemployment and employment statistics
The UK unemployment rate rose to a four-year high of 5.1% in the three months to October as the labor market showed signs of further weakening ahead of last month’s budget.
Wage increase excluding bonuses decreased from 4.7% in the previous month to 4.6% in October.
Latest figures estimate the number of workers on payroll fell by 38,000 to 30.3 million in November, in further evidence that the job market is weakening.
The number of people receiving unemployment benefits also increased; This shows that employers’ layoffs are also effective in the latest figures.
Economists surveyed by Reuters had expected the unemployment rate to rise to 5.1% in October, from 5% in the previous month.
The unemployment rate is at the highest level since the first quarter of 2021; However, with the end of the pandemic period, this rate reached the highest level since the beginning of 2016.
The ONS said young workers in particular were struggling in a tough recruitment environment.
ONS director of economic statistics Liz McKeown said: “The overall picture remains that the labor market is weakening.
“While firms have told us there are fewer jobs recently, the number of employees on payroll has fallen again, reflecting weak hiring activity.”
Work and Pensions Minister Pat McFadden said: “More than 350,000 people are in work this year and the inactivity rate is at its lowest level in five years, but today’s figures underline the scale of the challenge we are inheriting.”
Unemployment has been rising steadily since late 2023. The unemployment rate in the three months to December 2023 was 3.9%. While this rate was 4.2 percent during the general elections in July 2024, it increased to 5 percent in the three months until September 2025.
A recent study by the Çözüm Foundation found that young people are bearing the brunt of rising unemployment, with an extra 415,000 people under the age of 26 from October 2020 to September 2025 inflating unemployment figures.
Wages have remained above inflation for much of the last two years, although much of the extra disposable income has been saved rather than spent, especially in the top half of the income scale.
Inflation was below 2 percent last year, rising to 3.8 percent in the summer, then falling to 3.6 percent in the latest figures for October.
The fall in inflation and weak growth are expected to persuade the Bank of England to cut interest rates when policymakers meet on Thursday. A fall in the cost of borrowing from 4 percent to 3.75 percent would ease pressure on indebted households and businesses, potentially limiting further increases in unemployment in 2026.
