Quick Read
- UK unemployment rate hit 5.2% in October-December 2025.
- This marks the highest jobless rate in nearly five years.
- Youth unemployment (16-24) surged to 16.1%, a decade high.
- Economists anticipate Bank of England interest rate cuts due to labor market weakness.
- Government pledges £1.5bn to tackle youth joblessness and create apprenticeships.
LONDON (Azat TV) – The United Kingdom’s unemployment rate climbed to 5.2% in the three months ending December 2025, marking its highest level in nearly five years. This latest increase follows a rise to 5.1% in the preceding September to November period, signaling a continued weakening of the labor market, particularly impacting younger workers and intensifying calls for the Bank of England to consider interest rate reductions.
Official figures from the Office for National Statistics (ONS) confirmed that the unemployment rate for October to December 2025 reached 5.2%, up from 5.1% in the previous quarter. This represents the highest overall jobless rate since the three months to January 2021, and outside of the pandemic era, it is the highest since autumn 2015. Most economists had anticipated the rate to remain at 5.1%, making this uptick a significant indicator of labor market fragility.
UK Unemployment Rate’s Upward Trend
The consistent rise in the UK unemployment rate has become a focal point for economic observers. The ONS data also revealed a concerning trend in redundancies, which are showing an upward trajectory. Liz McKeown, ONS director of economic statistics, noted that more people who were out of work are now actively seeking employment. Concurrently, the number of vacancies, while seeing a slight increase of 2,000 quarter-on-quarter to 726,000 in the three months to January, has remained broadly stable since mid-2025. This dynamic means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high.
The reliability of the ONS’s job market data has faced repeated scrutiny, including from the Bank of England. Despite these criticisms, the consistent direction of the data points to a tightening job market for job seekers.
Youth Unemployment Reaches Decade High
A particularly alarming aspect of the latest figures is the surge in youth unemployment. The ONS reported that the unemployment rate for 16- to 24-year-olds soared to 16.1% in the latest quarter, marking its highest level since early 2015. The Resolution Foundation think tank highlighted that the UK’s youth unemployment is now higher than the EU average (14.9% in the final three months of last year) for the first time since records began in 2000. This disparity underscores a growing challenge for young individuals entering the workforce.
Danni Hewson, AJ Bell’s head of financial analysis, attributes this to a scarcity of entry-level roles and the increasing impact of artificial intelligence (AI). While AI integration can boost productivity, it may also reduce the need for entry-level positions, making it harder for young people to gain initial work experience. Jack Kennedy, senior economist at job site Indeed, further explained that employer caution is widespread, with businesses in ‘wait-and-see mode’ and reluctant to expand workforces until there’s greater economic clarity. This reluctance disproportionately affects junior hiring, creating a significant barrier for young workers to start their careers.
Lucy Gabb, a Cambridge University graduate from July 2025 with a French degree, shared her ‘soul destroying’ experience of applying for over 50 graduate and entry-level publishing roles while working a café job in London. Her struggle is emblematic of the challenges many young people face in the current job market.
Economic Pressures and Interest Rate Outlook
The weakening labor market data is intensifying speculation about potential interest rate cuts by the Bank of England. Sanjay Raja, chief UK economist at Deutsche Bank, suggested that there might be further room for the unemployment rate to climb before reaching its peak. This, coupled with a slowdown in wage growth to 4.2%—despite inflation-busting public sector pay awards averaging 7.2%—strengthens the argument for monetary easing. Paul Dales, chief UK economist at Capital Economics, believes these figures support the idea that the Bank of England has ‘at least a couple more interest rate cuts in its locker.’
Chancellor Rachel Reeves’ 2024 Budget, which included hiked employer National Insurance contributions and a rise in the minimum wage, has been cited by some businesses as a factor in slowing down hiring and replacement of outgoing workers. Thomas Pugh, chief economist at RSM UK, stated that December’s rising unemployment, slowing private wage growth, and falling payroll numbers in January all point towards a rate cut in March, especially if upcoming inflation figures are soft. The UK’s current inflation rate stands at 3.4%, with new figures expected soon. Cooling inflation and falling interest rates are anticipated to boost business confidence and potentially kickstart renewed growth, according to Hewson.
Government Initiatives and Political Reactions
The government has acknowledged the challenges, particularly regarding youth employment. Pat McFadden, the Secretary of State for Work and Pensions, stated that despite 381,000 more people being in work since early 2025, more needs to be done. He highlighted the government’s £1.5 billion drive to tackle youth unemployment as a key priority. This includes making it easier for young people to find and secure apprenticeships, alongside an investment to create 50,000 new apprenticeships. Initiatives like trebling the number of ‘jobcentres on wheels’ and establishing youth hubs across Great Britain are also part of the ‘Youth Guarantee’ to provide young people with opportunities to earn or learn.
However, the opposition has been critical. The Conservatives accused Labour of overseeing ‘an unprecedented series of monthly unemployment increases,’ which they described as the ‘predictable result of bad decisions and economic incompetence.’ Helen Whately, Shadow Work and Pensions Secretary, specifically blamed Labour’s ‘tax hikes’ for the disappearance of entry-level roles, arguing that young people are taking the hardest hit.
The persistent rise in the UK unemployment rate, particularly among young people, signals a structural challenge in the labor market that extends beyond cyclical fluctuations, potentially exacerbated by technological advancements and policy shifts, requiring targeted interventions to prevent long-term economic scarring.