"Labour market data for November reported an unemployment rate of 5.1%, signaling that many employers remain cautious. Recruitment has softened and some firms continue to reduce headcount, reflecting weaker demand in some sectors, still-tight financial conditions and the lingering effects of higher costs. This is not a collapse, but we are seeing a meaningful loosening compared with the exceptionally tight labour market seen in recent years."
"However, the long-term trajectory for the labour market is more positive. Unemployment is likely to peak in the early months of 2026 and then cool as the year progresses. As stable - if not expansive - growth filters through the economy, and businesses are able to act with more certainty following the Autumn Budget and commit to long-term recruitment decisions, we can expect unemployment to fall."
"Youth unemployment, at over 15%, will remain a particular concern, as entry-level hiring is being reduced and some short-term contracts are not being renewed. If high youth unemployment continues, the risks extend: the longer you are out of work, the more unemployable you become. Prolonged spells out of work can reduce skills acquisition, lower lifetime earnings, and weaken productivity growth over time."
Unemployment reached 5.1% in November as recruitment softened and some firms reduced headcount amid weaker sector demand, tight financial conditions, and higher costs. The labour market is loosening from recent exceptional tightness, though it is not collapsing. Unemployment is projected to peak in early 2026 before falling as stable or modest growth and greater business certainty following the Autumn Budget enable longer-term hiring. Youth unemployment exceeds 15%, reducing entry-level opportunities and risking long-term skill loss, lower lifetime earnings, and weaker productivity. Practical skills training and private-sector investment are essential to avert future skills shortages.
Read at London Business News | Londonlovesbusiness.com
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