Britain is bracing for a fresh jobs crisis, with experts warning unemployment could soon climb to its highest level since the pandemic.
New analysis from the Resolution Foundation suggests the jobless rate is set to hit five per cent in the three months to August 2025, up from 4.7 per cent in the previous quarter.
If confirmed, it would mark the first significant rise in unemployment since the early days of COVID-19, sparking fears that worse may be to come.
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The figures have already triggered alarm across the economy, piling pressure on Chancellor Rachel Reeves over her handling of the labour market.
Critics have pointed to Ms Reeves' recent fiscal policies, including hikes in National Insurance contributions for employers and increases in the national minimum wage, as significant contributors to the deterioration of the labour market.
Shadow Business Secretary Andrew Griffith has criticised her moves to increase costs on employers.Mr Griffith said: “Unemployment has risen for ten consecutive months on their watch, and it's clear this trajectory is only heading in one direction."
He added, "This is the predictable outcome of their war on business."
Indeed, businesses nationwide have voiced concerns over rising costs, with many small firms claiming they feel abandoned by the Government.
David Hale, of the Federation of Small Businesses, explained, "Jobs don't grow on trees. Small businesses don't think the Government has their back if they create a job."
Unemployment continues to rise
|GB NEWS
The shortage of job opportunities has been particularly painful for recent graduates, with 625,000 young people aged 16 to 24 unemployed between February and April – up 42,000 on the previous year. Also, the youth employment rate climbed to 14.3 per cent, up from 13.6 per cent, the ONS figures revealed.
An estimated 12.8 per cent of people aged 16 to 24 in the UK were not in education, employment or training (NEET) from April to June 2025.
This is up 0.3 percentage points compared with January to March 2025 and up 0.1 percentage points on the year.
The Resolution Foundation's analysis also paints a grim picture of the labour market.
The percentage of young people who are not in education, employment or training (NEET) increased over the quarter (January to March 2025). People aged 16 to 24 years NEET as a percentage of all people aged 16 to 24 years by age, seasonally adjusted, UK, January to March 2019 to April to June 2025
|ONS
While the official unemployment rate remains relatively stable at 4.7 per cent, other indicators, including job vacancies, employment, and inactivity, suggest that the situation is far worse than the headline figures.
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Hiring has slowed dramatically, particularly in retail, hospitality, and wholesale sectors, which have seen the most significant declines in job vacancies over the past year.
Gregory Thwaites, research director at the Resolution Foundation, warned that the unemployment rate will not likely peak anytime soon.
He said; "Unemployment has not yet peaked. The ongoing loosening of the labour market is more a result of businesses freezing hiring rather than widespread layoffs, but this still spells bad news for jobseekers, with vacancies set to continue dwindling."