UK unemployment rate rises to 5.1%

The Bank of England is expected to cut interest rates by a quarter point to 3.75% this week © BloombergUK unemployment rate rises to 5.1% on x (opens in a new window)UK unemployment rate rises to 5.1% on facebook (opens in a new window)UK unemployment rate rises to 5.1% on linkedin (opens in a new window)UK unemployment rate rises to 5.1% on whatsapp (opens in a new window) Save UK unemployment rate rises to 5.1% on x (opens in a new window)UK unemployment rate rises to 5.1% on facebook (opens in a new window)UK unemployment rate rises to 5.1% on linkedin (opens in a new window)UK unemployment rate rises to 5.1% on whatsapp (opens in a new window) Save Delphine StraussPublishedDecember 16 2025UpdatedDecember 16 2025Jump to comments sectionPrint this pageStay informed with free updatesSimply sign up to the UK employment myFT Digest -- delivered directly to your inbox.The UK unemployment rate rose to 5.1 per cent and wage growth slowed in the three months to October as employers held off hiring ahead of the government’s second tax-raising Budget.Tuesday’s figure from the Office for National Statistics was up from 5 per cent in the three months to September — in line with analysts’ expectations and the highest since January 2021.Separate figures from tax records showed that payroll employment fell by 149,000, or 0.5 per cent, in the year to October, the ONS said. Provisional figures pointed to a further fall of 38,000, or 0.1 per cent, between October and November, although these are likely to be revised. The weakness in the jobs market reflects the uncertainty that weighed on the economy in the run-up to the November 26 Budget, as businesses delayed decisions while waiting for clarity on tax policy.

Chancellor Rachel Reeves has come under fire for leaks over possible tax rises in the months that preceded the Budget, which employers said had a chilling effect on business and consumer confidence. Reeves said she did not authorise any leaks.Young people have been especially hard hit by the slowdown in hiring, with the ONS’s figures showing the jobless rate for 18- to 24-year-olds climbed to 13.4 per cent in the three months to October.Pat McFadden, secretary for work and pensions, said the increase showed “the scale of the challenge we’ve inherited” and justified recent decisions to subsidise 50,000 more apprenticeships and 350,000 work placements for young people.Tuesday’s figures will also cement expectations that the Bank of England is set to cut interest rates by another quarter of a point to 3.75 per cent on Thursday, as officials on the Monetary Policy Committee become more confident that weak economic growth is bearing down on inflation. Annual growth in average private sector weekly earnings — the measure most closely watched by rate setters — slowed to 3.9 per cent in the three months to October, down from 4.2 per cent the previous month.Ashley Webb, at the consultancy Capital Economics, said this strengthened expectations that the BoE would “deliver a present just in time for Christmas” by lowering borrowing costs, provided there was no unwelcome surprise in inflation data due on Wednesday.However, wage growth has not fallen as far as analysts had expected and some say this will make it difficult for the MPC to cut interest rates further next year. Total pay growth “remains too fast for the MPC to relax”, said Thomas Pugh, economist at the audit firm RSM UK.Following the release of the figures, traders continued to bet on a rate cut this week, with a more than 90 per cent chance implied by the swaps market. The data drew a muted reaction in financial markets, with the pound little changed against the dollar at $1.336.Reuse this content (opens in new window) CommentsJump to comments sectionPromoted Content Follow the topics in this article UK employment Add to myFT Delphine Strauss Add to myFT CommentsThe UK unemployment rate rose to 5.1 per cent and wage growth slowed in the three months to October as employers held off hiring ahead of the government’s second tax-raising Budget.Tuesday’s figure from the Office for National Statistics was up from 5 per cent in the three months to September — in line with analysts’ expectations and the highest since January 2021.Separate figures from tax records showed that payroll employment fell by 149,000, or 0.5 per cent, in the year to October, the ONS said. Provisional figures pointed to a further fall of 38,000, or 0.1 per cent, between October and November, although these are likely to be revised. The weakness in the jobs market reflects the uncertainty that weighed on the economy in the run-up to the November 26 Budget, as businesses delayed decisions while waiting for clarity on tax policy.

Chancellor Rachel Reeves has come under fire for leaks over possible tax rises in the months that preceded the Budget, which employers said had a chilling effect on business and consumer confidence. Reeves said she did not authorise any leaks.Young people have been especially hard hit by the slowdown in hiring, with the ONS’s figures showing the jobless rate for 18- to 24-year-olds climbed to 13.4 per cent in the three months to October.Pat McFadden, secretary for work and pensions, said the increase showed “the scale of the challenge we’ve inherited” and justified recent decisions to subsidise 50,000 more apprenticeships and 350,000 work placements for young people.Tuesday’s figures will also cement expectations that the Bank of England is set to cut interest rates by another quarter of a point to 3.75 per cent on Thursday, as officials on the Monetary Policy Committee become more confident that weak economic growth is bearing down on inflation. Annual growth in average private sector weekly earnings — the measure most closely watched by rate setters — slowed to 3.9 per cent in the three months to October, down from 4.2 per cent the previous month.Ashley Webb, at the consultancy Capital Economics, said this strengthened expectations that the BoE would “deliver a present just in time for Christmas” by lowering borrowing costs, provided there was no unwelcome surprise in inflation data due on Wednesday.However, wage growth has not fallen as far as analysts had expected and some say this will make it difficult for the MPC to cut interest rates further next year. Total pay growth “remains too fast for the MPC to relax”, said Thomas Pugh, economist at the audit firm RSM UK.Following the release of the figures, traders continued to bet on a rate cut this week, with a more than 90 per cent chance implied by the swaps market. The data drew a muted reaction in financial markets, with the pound little changed against the dollar at $1.336.