UK jobless rate surges as nearly one in six young people out of work

Unemployment has unexpectedly risen to a near five-year high with the jobless rate among young people at its worst level for more than a decade, official figures show.

The Office for National Statistics (ONS) said the rate of unemployment lifted to 5.2% in the three months to December, up from 5.1% in the three months to November.

This was the highest since the three months to January 2021, and outside of the pandemic era, it marks the highest since the autumn of 2015.

Experts said young workers were among the hardest hit, with almost one in six left without a job.

The ONS said the unemployment rate for 16 to 24-year-olds surged to 16.1% in the latest quarter – the highest level since early 2015.

The Resolution Foundation think tank said the UK’s youth unemployment is now higher than the EU average for the first time since records began in 2000, with the rate across Europe at 14.9% in the final three months of last year.

Louise Murphy, senior economist at the Resolution Foundation, said: “We must urgently turn our attention to the UK’s unemployment problems.

“At the end of last year almost one-in-six young people who wanted to work couldn’t find a job. Unemployment risks climbing even further in 2026.”

“Getting youth unemployment down in this country – along with the share of young people who aren’t in education or training either – must be a top priority for 2026,” she added.

The weakened jobs market has seen sectors such as retail and hospitality come under particular strain after the Government hiked national insurance contributions and pushed through above-inflation increases in the minimum wage, with some companies cutting jobs and slowing hiring in response.

The Conservatives said the latest rise in the jobless rate was “the predictable result of bad decisions and economic incompetence” by the Labour Government.

Shadow work and pensions secretary Helen Whately said: “Young people are taking the hardest hit.

“Entry-level roles are the first to disappear from Labour’s tax hikes.

“By making hiring more expensive and more risky, Labour are ensuring school leavers and graduates never even get a foot in the door.”

The pound also weakened sharply on the latest signs of pressures in the labour market, with sterling 0.3% down at 1.359 US dollars and 0.2% lower at 1.147 euros on Tuesday morning.

Most economists had expected the rate of UK unemployment to remain at 5.1% in the latest quarter.

Work and Pensions Secretary Pat McFadden said: “Today’s figures show there are 381,000 more people in work since the start of 2025, but we know there is more to do to get people into jobs.

“Our £1.5 billion drive to tackle youth unemployment is a key priority and this month we announced that we’ll make it easier for young people to find and secure an apprenticeship, which comes on top of our investment to create 50,000 new apprenticeships.”

The ONS added that regular wage growth fell back once again to is lowest level for almost four years, to 4.2% in the three months to December, against a downwardly revised 4.4% in the three months to November, though it was 0.8% higher after taking Consumer Prices Index inflation into account.

But there was another welcome increase in vacancies, up by 2,000 quarter-on-quarter to 726,000 in the three months to January, which is the second rise in a row.

Liz McKeown, ONS director of economic statistics, said the data showed “weak hiring activity” and that “more people who were out of work are now actively looking for a job”.

She added the number of unemployed people per vacancy has now reached a new post-pandemic high.

The ONS said redundancies increased by 11,000 to 145,000 in the final quarter of 2025, while the data also showed the number of workers on payrolls fell by 6,000 in the three months to December and is estimated to have dropped by 11,000 in January to 30.3 million.

It comes after recent growth figures showed the economy recorded meagre growth of 0.1% in the final three months of last year amid budget uncertainty and a lacklustre performance in December.

Experts said the data will reinforce expectations for the Bank of England to cut interest rates again next month, to 3.5% from 3.75% currently.

An expected drop in inflation in data due on Wednesday is set to add to the argument for a rates reduction.