Unemployment in the UK increased to 5.1 per cent in the three months to October 2025, up from five per cent in September, according to the latest Office for National Statistics (ONS) figures.
While these figures come before Chancellor Rachel Reeves delivered her Budget on November 26, they come as another blow to the Treasury as the Labour Government attempts to bolster the economy.
Today's ONS unemployment rate figures for October are the highest since the first quarter of 2021, and if the Covid-19 pandemic era is not taking into account, the highest since 2016.
As well as this, UK average regular earnings growth slipped to 4.6 per cent in the three months to October and was 0.9 per cent higher factoring in the consumer prices index CPI inflation.
Rachel Reeves has sought to bolster economic growth | GETTY Notably, Britain's economic inactivity rate for people aged 16 to 64 years was projected to be 21 per cent in August to October 2025, which is lower than in the latest quarter and under estimates of a year ago.
Furthermore, the UK Claimant Count for November 2025, which measures how many people receive out-of-work benefits, jumped on the month but decreased on the year to an estimated 1.683 million.
The latest ONS figures estimate the number of employees on payrolls fell by around 38,000 during November to 30.3 million in further sign of a weakened jobs market in the UK.
Analysts note younger workers are currently struggling to navigate the job market with some blaming the Chancellor's decision to raise the National Living Wage and National Insurance contributions for employers; which has resulted in businesses not advertising jobs as much.
The latest unemployment figures are a blow to the Chancellor
|GETTY / ONS
Liz McKeown, ONS director of economic statistics, said: “The overall picture continues to be of a weakening labour market. The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.
"This weakness is also reflected in an increase in the unemployment rate while vacancies remained broadly flat. The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups."
Secretary of State for Work and Pensions Pat McFadden said: "There are over 350,000 more people in work this year and the rate of inactivity is at its joint lowest in over five years, but today’s figures underline the scale of the challenge we’ve inherited.
"That is why we are investing £1.5billion to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people - giving them real experience and a foot in the door.
"To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work."
In reaction to today's figures, accountancy firm MHA's economic adviser Professor Joe Nellis shared: "October’s labour market data reveals clear signs of strain in the UK economy. The unemployment rate has risen to 5.1 per cent, its highest level in several years, as unemployment creeps ever closer to the pandemic high of 5.3 per cent.
"This signals that employers are now responding more decisively to weaker demand and higher financing costs. At the same time, regular pay (excluding bonuses) grew by 4.6 per cent year-on-year.
"While this is higher than forecast, the pace of increase is slowing, suggesting wage pressures are easing for reasons that reflect softer economic conditions rather than strong productivity gains. The rise in unemployment marks a further shift in labour market dynamics. Redundancies are increasing, and vacancy numbers are continuing to fall as firms scale back hiring plans.
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Unemployment rises again to 5.1 per cent
| GETTY"This adjustment is consistent with an economy operating under tight monetary policy and persistent uncertainty around global demand and the future of workplace technology."
Isaac Stell, an investment manager at Wealth Club, added: "The rate of UK unemployment continued to edge up during October, as the confidence sapping budgetary pre-amble took its toll on the UK jobs market.
"With all the noise, speculation and damaging sentiment, it is no surprise that UK businesses put off hiring in October. These figures should come as no surprise to the Chancellor and the Government, businesses need an environment of confidence in order to thrive, it is clear to anyone that this has been lacking in the recent past.
"Despite unemployment ticking up, pay growth came in far higher than expected, good news for those in employment with the Christmas shopping season firmly underway."