UK unemployment hits 5%, highest since 2021

Britain’s unemployment rate climbed to five percent in the third quarter of 2025, marking its highest point since early 2021, according to data released Tuesday by the Office for National Statistics (ONS).

The figure, up from 4.7 percent in the previous quarter, surpassed analysts’ expectations of 4.9 percent, adding pressure on the Labour government ahead of its November 26 budget presentation.

ONS Director of Economic Statistics, Liz McKeown, noted that the number of people on payroll has been steadily declining, with revised tax data indicating drops across most of the past year. The report highlights a slowdown in hiring and signals further strain on the UK’s struggling economy.

The development poses a challenge for Prime Minister Keir Starmer’s administration, which faces declining public approval 16 months after its general election victory.

“There will be no pre-budget comforts that can be taken from today’s employment data,” said Isaac Stell, an analyst at Wealth Club. “Not only has the unemployment rate risen, but wage growth continues to shrink.”

Stell added that uncertainty surrounding the upcoming budget has caused businesses to delay recruitment and investment decisions.

However, economists suggest the weak labour market figures may push the Bank of England to consider cutting its main interest rate during its December policy meeting, potentially easing financial pressure.

Finance Minister Rachel Reeves has hinted that tax increases are likely in the forthcoming budget as part of efforts to reduce government debt and strengthen funding for public services.