Young people are bearing the brunt of Britain’s jobs downturn, according to a report, before official figures this week that are expected to show the UK unemployment rate rising to 5.1%.
The Resolution Foundation thinktank said a “jobs deficit” was pushing a growing number of graduates and non-graduates into unemployment as employers reduced hiring.
City economists expect the unemployment rate to have edged up from 5% in September to 5.1% in October, in Tuesday’s update from the Office for National Statistics.
In a busy week for economic news, this will be followed by the latest reading of UK inflation on Wednesday and an interest rates decision on Thursday.
The Resolution Foundation said that while many people left employment during the Covid pandemic because of ill health, the recent trend indicated job hunters were stymied by cuts across the public and private sectors.
Nye Cominetti, the thinktank’s principal economist, said: “In recent years, public debate has centred around an ‘inactivity crisis’ caused by ill health and disability. But while rising levels of health-related inactivity are a big problem, rising unemployment is the forgotten driver of Britain’s current jobs downturn.
“Young people again find themselves at the heart of this downturn, just as they were in the wake of the financial crisis and Covid. Policymakers and employers need to redouble efforts to support them.”
While the Bank of England and the Treasury’s independent forecaster, the Office for Budget Responsibility, think unemployment has peaked, several economic forecasters suggest it could reach 5.5% next year as companies retrench because of higher taxes, low consumer confidence and sluggish growth.
The insight into the jobs market will be followed by an update on inflation, which is expected have eased from 3.6% to 3.5% in November.
The fall, while modest, will probably persuade a majority of the Bank of England’s monetary policy committee (MPC) to cut rates from 4% to 3.75%, according to a poll of City economists by Reuters.
On Thursday Andrew Bailey, the Bank’s governor, is expected to have joined forces with the four members on the nine-member MPC who voted to reduce the cost of borrowing at the previous meeting.
Bailey, who voted to keep rates on hold at the last meeting, has shown in speeches and public debates that he has become concerned about the slowing economy and rising unemployment.
Ruth Gregory, the deputy chief UK economist at the consultancy Capital Economics, said the economy was struggling to grow. “It’s striking that the economy has only grown in one of the past seven months,” she said, adding that October’s 0.1% contraction left the economy no bigger than it was in April.
The Resolution Foundation blamed the weaker economy for most of the rise in joblessness.
Ministers are growing increasingly alarmed about the youth jobs market as the number of 16- to 24-year-olds who are not in education, employment or training (Neet) has climbed to almost a million.
A report by the consultants PWC last week showed the UK had fallen down an international ranking for youth employment, slipping four places to 27th out of 38 members of the Organisation for Economic Co-operation and Development.
The Resolution Foundation’s estimate of the UK’s working-age employment rate was down one percentage point from October 2020 to September 2025 – equivalent to 415,0000 workers.
“The fall in employment over both the past 12 months and the past five years is entirely accounted for by higher unemployment, not rising economic inactivity as many people assume, and young people are bearing the brunt of Britain’s jobs downturn,” the report said.
The participation rate – or the share of people who are either working or looking for work – was 79.5%, according to the latest figures, above the pre-pandemic level of 79.2% and close to a record high of 79.9% in 2023.
