(qlmbusinessnews.com . Wed 18th Feb, 2026) London, UK —
Navigating the UK's Soaring Unemployment Rates: Impact on Youth Employment in 2025
UK Unemployment Reaches Five-Year High, Young People Hit Hardest
The United Kingdom has witnessed a worrying increase in its unemployment rate, reaching a peak not seen in almost five years, according to the most recent statistics released by the Office for National Statistics (ONS). The data reveals that the unemployment rate edged up to 5.2% in the final quarter of 2025, a slight increase from 5.1% in the preceding quarter.
Alarmingly, the impact has been particularly severe on the country's younger demographic, with the 16 to 24 age group experiencing an unemployment rate of 16.1% – the highest in over a decade. This has raised concerns about the challenges faced by young job seekers in an increasingly competitive market.
Despite the gloomy unemployment figures, those in employment are experiencing wage increases that outpace inflation. However, the growth in wages is decelerating, adding another layer of complexity to the UK's economic landscape.
Businesses are citing increased operational costs due to policy decisions made in recent Budgets, such as the rise in employer National Insurance contributions and the minimum wage. These factors are thought to be contributing to the slowdown in hiring.
In response to the troubling figures, Work and Pensions Secretary Pat McFadden emphasised the government's commitment to tackling the issue, particularly youth unemployment. Efforts to facilitate access to apprenticeships for young people were highlighted as a key initiative.
However, the opposition has been critical of the government's handling of the economy, attributing the rise in unemployment to “economic incompetence.” Shadow Work and Pensions Secretary Helen Whately criticised the impact of tax increases on the availability of entry-level jobs, arguing that young people were being disproportionately affected.
Amid calls for action, the Liberal Democrats have proposed an emergency VAT cut for the hard-hit hospitality sector, aiming to alleviate some of the job losses.
The situation has been described as particularly dire for young adults entering the job market, with former Health Secretary Alan Milburn painting a bleak picture of young individuals facing a cycle of poor health, education, and reliance on the benefits system.
The personal toll of the job market's competitiveness is vividly illustrated by the experience of Lucy Gabb, a recent Cambridge University graduate struggling to secure employment in publishing. With over 50 applications and only one interview, the challenges facing young job seekers are starkly evident.
Sector-wise, the retail and wholesale industry has seen a significant reduction in workforce numbers, while health and social work sectors have witnessed job growth. Yet, the rise in artificial intelligence investment poses a new threat, particularly to entry-level positions, potentially exacerbating the situation for young job seekers.
Wage growth deceleration has prompted discussions about the Bank of England's next moves regarding interest rates, with some experts speculating on potential cuts to tackle inflation.
Amidst these developments, the accuracy of ONS's job market data has come under scrutiny, highlighting the complexity of navigating the UK's economic challenges.
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