UK unemployment holds at four year high as job vacancies plummet

Britain’s unemployment rate remained unchanged at 4.7% in the three months to June 2025, marking the highest level since July 2021, as the labour market continued its gradual cooling amid mounting economic pressures.

Official statistics released by the Office for National Statistics revealed that job vacancies tumbled by 44,000 during the three-month period to July, falling to 718,000 – the lowest level since April 2021. This represents the 37th consecutive period of declining vacancies, with reductions occurring across 16 of the 18 industry sectors monitored.

The deterioration in hiring conditions reflects the impact of increased employment costs following Chancellor Rachel Reeves’ autumn budget, which introduced higher National Insurance contributions for employers and a 6.7% rise in the national minimum wage. Liz McKeown, ONS director of economic statistics, noted that the number of employees on payroll has now fallen in 10 of the last 12 months, with these falls concentrated in hospitality and retail.

Despite the weakening jobs market, wage growth remained robust at 5% annually for regular earnings excluding bonuses in the three months to June. However, when adjusted for inflation, real wage growth stood at just 1.5%, reflecting the ongoing cost-of-living pressures facing working households.

The mixed labour market signals present a complex challenge for Bank of England policymakers, who reduced interest rates to 4% last week but remain cautious about further easing amid persistent inflation concerns. James Smith, economist at ING, suggested that the UK jobs market is undoubtedly cooling, though a more modest fall in payroll employment suggests that the worst may be behind us.