UK Unemployment Rises to 5%, Highest Since 2021, Ahead of Key Budget Announcement

Britain’s unemployment rate has risen to 5% in the third quarter of 2025, marking its highest level since early 2021, according to new figures released on Tuesday by the Office for National Statistics (ONS).

The figure represents an increase from 4.7% in the previous quarter and comes just weeks before the Labour government’s annual budget on November 26, which is expected to include tax hikes as the UK grapples with sluggish economic growth. Analysts had forecast a smaller rise to 4.9%.

“The number of people on payroll is falling, with revised tax data now showing declines in most of the last 12 months,” said Liz McKeown, ONS Director of Economic Statistics.

The disappointing data poses a setback for Prime Minister Keir Starmer’s Labour Party, which has faced waning public support 16 months after its general election victory.

“There will be no pre-budget comforts that can be taken from today’s employment data,” warned 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 prompted businesses to delay hiring and investment decisions until there is more clarity on the government’s economic direction.

Economists noted, however, that the weak labour market data could increase pressure on the Bank of England to cut interest rates at its next policy meeting in December, providing potential relief to households and businesses.

Meanwhile, Finance Minister Rachel Reeves has signaled that tax rises are likely in the upcoming budget to help reduce government debt and fund public services.

Opinion Nigeria News