The ONS reported that the unemployment rate climbed from 4.7 percent in the previous quarter, surpassing analysts’ consensus forecast of 4.9 percent for the period spanning July to September. ONS director of economic statistics Liz McKeown noted that payroll numbers have been falling, with revised tax data indicating declines in most of the past twelve months.
The figures pose a political challenge for Prime Minister Keir Starmer and the ruling Labour Party, which has struggled in popularity polls since winning the general election 16 months ago. Isaac Stell, an analyst at investment manager Wealth Club, said the data offered “no pre-budget comforts,” highlighting that not only is unemployment rising, but wage growth continues to slow.
Stell added that uncertainty around the upcoming budget has caused businesses to postpone hiring and delay investment decisions. Analysts, however, suggested that the weak employment figures may increase the likelihood of the Bank of England cutting its main interest rate at the next monetary policy meeting in December, potentially easing some economic pressure.
Finance Minister Rachel Reeves has indicated that the forthcoming budget will include tax increases aimed at reducing government debt and funding public services, a move likely to face scrutiny amid rising unemployment and sluggish wage growth.
The data underscores the challenges facing the UK economy as policymakers balance the need for fiscal consolidation with the pressure to support jobs and growth.