The United Kingdom’s unemployment rate climbed to 5% in the three months leading up to September, signaling a slowdown in the job market, according to newly released data from the Office for National Statistics .
This marks the highest level of unemployment since the period between December 2020 and February 2021.
The increase also surpassed forecasts, exceeding the 4.9% rate projected by analysts ahead of the upcoming Budget on November 26.
During the same period, average wages grew by 4.6%, slightly below the 4.7% recorded in the previous quarter ending in August.
Liz McKeown, the ONS director of economic statistics, noted that the latest figures indicate a softening labour market. “Taken together, these figures point to a weakening labour market.
Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high.
The number of job vacancies, however, remains broadly unchanged,” she said.
The report also revealed that the number of payrolled employees dropped by 109,000 (0.4%) year-on-year, while nearly 1.7 million people are currently claiming unemployment benefits, a marginal decrease compared to last year’s figure.
Reacting to the data, Work and Pensions Secretary Pat McFadden stated: “Over 329,000 more people have moved into work this year already, but today’s figures are exactly why we’re stepping up our plan to get Britain working.”
Richard Carter, head of fixed interest research at Quilter Cheviot, suggested that the proximity of the Budget may have caused employers to delay hiring.
“With the Budget two weeks away, many businesses will have shelved any major hiring plans,” he said. “Having already faced a significant rise in national insurance costs earlier in the year, they will likely be nervous to make any real commitments until they know whether further costs are heading their way.”
Similarly, Tina McKenzie, policy chair of the Federation of Small Businesses, criticized the government’s approach, saying the rise in unemployment and decline in payroll numbers highlight a “complacent attitude to jobs and businesses.”
She argued that small firms have been hindered from hiring due to “ever increasing regulation, litigation and tax,” urging Chancellor Rachel Reeves to “take action that backs jobs and growth.”
Despite the broader slowdown, the ONS reported that job vacancies have remained relatively stable, with about 723,000 openings recorded between August and October 2025.
The agency also cautioned that the unemployment figures should be interpreted carefully as it continues to improve the reliability of its data.
