Britain: Britain's unemployment rate edged up to its highest level since the pandemic in the third quarter of 2025, a sign of a labor market losing its fizz as firms curb investment and scale back hiring plans. Analysts have warned that the forthcoming Budget, due in late November, will need to deliver swift support to ease the strain on employers.
According to Namibia Press Agency, Britain's jobless rate for those aged 16 and over is estimated at 5 percent between July and September, up from both the previous quarter and the same quarter a year earlier, based on figures released by the Office for National Statistics (ONS). Over the same period, the number of payrolled employees fell by 26,000 quarter-on-quarter, while the estimated number of job vacancies remained broadly unchanged.
"Taken together, these figures point to a weakening labor market," said Liz McKeown, director of economic statistics at the ONS. Echoing her view, Naomi Clayton, chief executive at the Institute for Employment Studies, highlighted that outside the pandemic, the unemployment-to-vacancy ratio is the highest in 10 years.
The Resolution Foundation, a leading British think tank, indicated that the British labor market is weakening "on multiple fronts." They noted a fall of 64,000 in payrolled jobs over the past two months, a drop in short-term private-sector pay growth to 2.7 percent, and unemployment rising to 5 percent - its highest level since 2016. They also remarked on the continuous weakening of income growth, stating that private sector pay growth in September was significantly below the rate of inflation, with overall weekly pay growing by just 3 pounds over the past year after adjusting for inflation.
Calling the sharp decline in payrolled employees a wake-up call for the government, Alex Hall-Chen, principal policy advisor for employment at the Institute of Directors (IoD), explained that the drop reflects the impact of higher employer National Insurance contributions and the looming Employment Rights Bill. These measures have made hiring a costlier and riskier bet for businesses.
Citing an IoD survey of 500 business leaders in October, Hall-Chen mentioned that the Employment Rights Bill, aimed at strengthening worker protections, introduces stricter rules on dismissals, benefits, and workplace flexibility. She emphasized that the Bill is seen as "the top employment and workplace regulation blocking organisations' ability to grow," and deterring businesses from hiring staff.
Ahead of the Budget, the British government faces the challenge of aligning its pro-growth promises with a fiscal hole estimated at approximately 30 billion pounds. Jane Gratton, deputy director of public policy at the British Chambers of Commerce, stressed that the Budget must provide firms with optimism, especially with job vacancies static and high levels of economic inactivity.
Similarly, Nye Cominetti, principal economist at the Resolution Foundation, warned that the labor-market slump may not be a temporary issue and called for the Budget to protect workers while avoiding additional costs for employers. Neil Carberry, chief executive of the Recruitment and Employment Confederation, added that stabilizing vacancy numbers present an opportunity for progress if the Budget supports businesses rather than penalizing them. He urged for a break from rising business taxes and a more practical approach to the Employment Rights Bill.