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Recent official data reveals that UK unemployment has reached its highest level in nearly five years by the end of 2025. According to the Office for National Statistics (ONS), the unemployment rate increased to 5.2% during the three months leading up to December, up from 5.1% in the preceding three-month period. This rise coincides with a slowdown in annual wage growth, which has dropped to its lowest point in close to four years.
Young people, particularly those aged 16 to 24, have been disproportionately affected by these changes. The unemployment rate for this age group has climbed to 16.1%, marking its highest level since 2020. This trend emerges amid a subdued economic outlook for the UK, with businesses slowing recruitment and reducing workforce replacements due to rising costs. Chancellor Rachel Reeves’ 2024 Budget, which increased employer National Insurance contributions and raised the minimum wage, has also contributed to more cautious hiring practices among companies.
The government’s stance highlights youth unemployment as a pressing concern. Work and Pensions Secretary Pat McFadden emphasized that there is “more to do to get people in to jobs,” noting efforts to facilitate access to apprenticeships and the creation of 50,000 new apprenticeship positions. In contrast, the Conservative party criticized Labour’s handling of the issue, accusing it of causing an “unprecedented series of monthly unemployment increases” due to “bad decisions and economic incompetence.” Shadow work and pensions secretary Helen Whately added, “Young people are taking the hardest hit. Entry-level roles are the first to disappear from Labour’s tax hikes.”
Personal stories illustrate the challenge faced by young job seekers. Lucy Gabb, a Cambridge graduate from July 2025 with a degree in French, has struggled to secure employment in publishing. She described the competitiveness of entry-level positions and the paradox of needing experience to get a job while still studying. Despite applying to over 50 roles, she has received only one face-to-face interview, and frequent rejections or silence have left her feeling “soul-destroyed.” The ONS attributed the statistics to “weak hiring activity” and noted an increase in job seekers, which has pushed the ratio of unemployed individuals per vacancy to a post-pandemic peak, alongside a rise in redundancies.
Economic analysts also weigh in on these developments. Paul Dales, chief UK economist at Capital Economics, suggested that the lowering of wage growth provides the Bank of England with room to implement further interest rate cuts. Despite public sector pay growing by 7.2%, overall wage growth slowed to 4.2%, translating to a real growth of just 0.8% after accounting for inflation. Concerns have been expressed regarding the rapid adoption of artificial intelligence, which may enhance productivity in the near term but risk reducing the number of entry-level jobs, particularly impacting young people. However, some experts remain optimistic that easing inflation and decreasing interest rates could help restore business confidence and spur economic growth
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