There were over 1.79 million unemployed people in the United Kingdom in the three months to September 2025, compared with just over 1.74 million in the previous month. In the provided time period, there was a peak of 2.7 million people unemployed in November 2011 and a noticeable uptick in unemployment in 2020. The bump in unemployment caused by the COVID-19 pandemic peaked at almost 1.8 million in December 2020 then falling to a low of 1.2 million in August 2022, before climbing up again to the most recent levels. Government plans to boost UK workforce Although the Labour Party inherited a relatively healthy unemployment rate of around four percent from the previous government, the UK's labor market is less robust than it first appears. The current level of economic inactivity, is seen as the more concerning figure, especially the rising share of people on long-term sick leave. Just before the COVID-19 pandemic, at the end of 2019, there were around 2.08 million people economically inactive due to long-term sickness, with this figure increasing by around 740,000 by early 2024. Government plans to address the root cause of these issues and improve incentives to work were unveiled at the end of 2024, but may have come at an inopportune time. Labor market signals for 2025 Encouraging people back into work is one thing; making sure there are enough jobs is another. Recent data suggests that the UK is continuing to cool off from an overheated labor market in 2022, which at one point saw 1.3 million job vacancies in the UK. Although the current level of job vacancies is at more usual levels, any further falls could spell trouble for the economy. In December 2024, the number of people on UK payrolls fell by 47,000, while the number of redundancies has started to climb. Some UK businesses have also signalled that they have, or plan to, lay off staff due to increased taxes set to come into force in the next financial year.

According to a survey conducted in the third quarter of 2025, the main external concern for businesses in the United Kingdom, compared with the previous quarter, was that of taxation, at 59 percent of responding firms. Inflation was the next most concerning external issue, at 57 percent of firms, with competition the third-most important issue this quarter, at 35 percent of firms. Businesses takes the hit in the last budget After promising not to raise taxes for working people in the 2024 election, the Labour government's first budget that Autumn sought to increase revenue via higher taxes for employers. From April 2025 onwards, the rate of National Insurance Contributions for employers increased from 13.5 percent, to 15 percent. The UK's minimum wage also increased that month, rising from 11.44 pounds per hour to 12.21 pounds for workers aged 21 and over, with minimum earnings for younger workers also rising. Job losses accelerating in 2025 In recent years, the UK's labor market has gradually cooled, with the unemployment rate slowly ticking up from a low of 3.6 percent in Summer 2022. Additionally, there were a record 1.3 million job vacancies reported in May of that year, highlighting how overheated the jobs market was at that time. As of 2025, this is no longer the case, with the unemployment rate at 4.6 percent in April 2025, the highest since 2021, with job vacancies also falling to a four-year low. Since the start of the year, the number of employees on payrolls has fallen quite substantially, with approximately 230,000 jobs lost since the start of the year.