The impact of the UK's jobs downturn is disproportionately affecting young people, a recent report warns. This comes ahead of official figures that are anticipated to show a rise in the UK's unemployment rate to 5.1%.
The Resolution Foundation, a think tank, highlights a "jobs deficit" that is pushing both graduates and non-graduates into unemployment as employers scale back hiring. City economists predict the unemployment rate to have increased slightly from 5% in September to 5.1% in October, as indicated by the Office for National Statistics.
In a week packed with economic updates, this will be followed by the latest inflation figures and an interest rates decision. The Resolution Foundation attributes the recent trend to job seekers facing challenges due to cuts across both public and private sectors, rather than solely health-related reasons.
Nye Cominetti, the think tank's principal economist, emphasizes that while health-related inactivity is a significant issue, rising unemployment is the overlooked driver of the current jobs downturn. "Young people are once again at the forefront of this downturn, just as they were post-financial crisis and during Covid. Policymakers and employers must intensify their support for this demographic."
While some economic forecasters suggest unemployment has peaked, others predict it could reach 5.5% next year due to various economic factors. This insight into the jobs market will be followed by an update on inflation, which is expected to have slightly decreased from 3.6% to 3.5% in November.
The modest fall in inflation is likely to encourage the Bank of England's monetary policy committee to reduce interest rates from 4% to 3.75%. Andrew Bailey, the Bank's governor, is expected to align with the four members who previously voted for a rate cut.
Bailey's recent speeches and public debates reflect his growing concern about the slowing economy and rising unemployment. Ruth Gregory, deputy chief UK economist at Capital Economics, notes that the economy is struggling to grow, with a contraction in October leaving it no larger than it was in April.
The Resolution Foundation attributes the rise in joblessness primarily to the weaker economy. Ministers are increasingly alarmed about the youth jobs market, with the number of 16- to 24-year-olds not in education, employment, or training (Neet) reaching almost a million.
A recent PWC report shows the UK's decline in the international ranking for youth employment, slipping to 27th out of 38 members of the Organisation for Economic Co-operation and Development. The Resolution Foundation estimates the UK's working-age employment rate has decreased by one percentage point from October 2020 to September 2025, equivalent to 415,000 workers.
The report concludes that the fall in employment over the past 12 months and five years is entirely due to higher unemployment, not rising economic inactivity as commonly assumed. Young people are bearing the brunt of Britain's jobs downturn, a trend that demands urgent attention and action.
