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UK unemployment rate remains at four-year high of 4.7% as job vacancies fall again

ended 12. August 2025

UNEMPLOYMENT in the UK is still at a four-year high of 4.7% and job vacancies have fallen again, new data shows.

The jobless rate stayed at 4.7% in the three months to June having risen to this level in May, according to the Office for National Statistics.

This remains the highest level since July 2021 - while pay growth in the UK remained at an annual 5% rate in the three months to June.

Job vacancies in the UK fell by 44,000 over the three months to July to 718,000.

This is the lowest number of job openings since April 2021.

David Belle, Founder and Trader at Fink Money, said payrolls are down for the sixth month in a row.

He said: "HMRC payrolls are down another 8k this month, which is a straight 6 month period of consecutive declines. Largely businesses were preparing for the ENIC increase before the budget and then shedding jobs post budget too. 

“The more astounding measure is that hours worked are at a high but our GDP growth has shown basically flat GDP growth over the period, which shows how bad productivity currently. This is what happens when your biggest tech unicorn is a food delivery service.”

Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said the Bank of England may need to cut rates after the data.

He said: "Rising unemployment is one metric that could push the Bank of England to cut rates sooner, as weaker labour demand signals a cooling economy. Businesses are under pressure to find efficiencies as labour costs have increased due to government policy. 

“In an era of rapid AI adoption, no role is entirely secure. Hiring freezes and redundancies will become the new norm.”

Rob Mansfield, Independent Financial Advisor at Rootes Wealth Management, blamed tax rises.

He said: "This is no surprise. We're seeing the effect of the tax rises put on businesses last October. With rumours of more tax rises coming this autumn, why would you take the risk of hiring more people? 

“The government need to have a long, hard think about the conditions and incentives they set if they want to see the growth they campaigned on.”

11 responses from the Newspage community

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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
Rising unemployment is one metric that could push the Bank of England to cut rates sooner, as weaker labour demand signals a cooling economy. Businesses are under pressure to find efficiencies as labour costs have increased due to government policy. In an era of rapid AI adoption, no role is entirely secure. Hiring freezes and redundancies will become the new norm.
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Rob MansfieldVerified
Independent Financial Advisor at Rootes Wealth Management
This is no surprise. We're seeing the effect of the tax rises put on businesses last October. With rumours of more tax rises coming this autumn, why would you take the risk of hiring more people? The government need to have a long, hard think about the conditions and incentives they set if they want to see the growth they campaigned on.
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Chris BarryVerified
Director at Thomas Legal
The national minimum wage has almost doubled in the last 10 years. This together with NI and pension contributions means an employer is now close to 30k pa for an entry level employee. The service sector are turning to A.I. enhancements where possible which is one reason for the drop in vacancies. Wage growth continues to outstrip house price growth, meaning housing is slowly becoming more affordable.
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Scott GallacherVerified
Director at Rowley Turton
No one can be surprised by these figures. Job vacancies have been falling for three years, and at first that wasn’t a major problem because we had a labour shortage after many people left the workforce during the pandemic. But we’ve now moved past any equilibrium or sweet spot and are firmly on the other side — facing a shortage of jobs instead. The situation hasn’t been helped by the Chancellor’s hike in employers’ National Insurance, which risks further dampening hiring. These are dark days for UK plc.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
Unemployment continues to edge upwards as businesses struggle, and vacancies have now fallen for a record 37th period in a row. This isn’t a blip or a trend, it’s a new British reality. Pay is still rising faster than inflation, but falling payroll numbers suggest many firms are in hire-freeze mode. With people costs soaring and tax burdens biting, businesses are turning to technology to replace or streamline roles, while others are holding off on hiring altogether until the economic outlook feels safer. If Britain is to recover, businesses need to be incentivised to hire people.
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Emma JonesVerified
Managing Director at Whenthebanksaysno.co.uk
With unemployment edging up, the Bank of England may ease off the brakes and that could mean a bit of welcome breathing space for mortgage holders. A slower jobs market takes the pressure off inflation, which is what’s been keeping rates high. If the trend continues, we could see mortgage costs start to edge down later this year. The key will be keeping the economy steady enough that lenders stay confident about who they’re lending to.
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Michelle LawsonVerified
Director at Lawson Financial
This is dire news for Labour. Rachel’s rampage through the economy is definitely biting hard. Business can’t sustain the high taxes so jobs will be impacted, hiring halted and restructuring will be in full flow. They can’t say they weren’t warned but I’m struggling to see what the positive ulterior motive is for such devastating decisions.
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Philly PonniahVerified
Chartered Wealth Manager and Financial Coach at Philly Financial
This unemployment number is predictable as business tax hikes hit employers’ bottom lines. When you add National Insurance increases on companies and then hint at more tax rises coming this autumn, of course hiring freezes up. The 37 consecutive quarters of falling vacancies tell the real story, businesses are playing defence. Why take the risk of expanding your workforce when the government keeps moving the goalposts on employment costs? The government campaigned on growth but created the exact opposite conditions. You can’t tax businesses into hiring more people. If they genuinely want the employment growth they promised, they need to reverse course and create incentives for job creation, not penalties for it.
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David BelleVerified
Founder and Trader at Fink Money
HMRC payrolls are down another 8k this month, which is a straight six month period of consecutive declines. Largely businesses were preparing for the National Insurance increase before the Budget and then shedding jobs post-Budget too. The more astounding measure is that hours worked are at a high but our GDP growth has shown basically flat GDP growth over the period, which shows how bad productivity currently is. This is what happens when your biggest tech unicorn is a food delivery service.
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Harry MillsVerified
Director at Oku Markets
The UK's June unemployment rate was steady at 4.7%, whilst wage growth excluding bonuses held at 5%. Payrolled employees fell by 8,000, less than the 20,000 forecast, and total weekly earnings eased to 4.6% from 5%. As we saw last month, the HMRC payrolls number is prone to revision, but as it stands, the total job losses since Labour's October Budget are 176 thousand. Whilst payrolls continue to fall, the ONS employment figure has risen to its highest since September 2024, and economic inactivity was unchanged at 21%. This could be in part due to a 3.9% rise in second jobs, which would increase the employment figure but wouldn't show up in the payroll numbers to avoid double-counting. The ONS employment data includes the self-employed and those in non-PAYE roles who aren’t counted in HMRC payrolls, so growth in these areas can push employment higher even as payroll jobs decline. We know firms are moving to hire contractors over employees, per job ads data.
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Sam KirkVerified
Managing Director at J-Flex Rubber Products
Here we are, yet again, the UK labour market is faltering. In manufacturing, the pressures are there to see. Labour’s heavy-handed tax increases, most notably higher employer National Insurance contributions, have left businesses with no choice but to pass these costs along the supply chain, fuelling higher prices, eroding competitiveness, and resulting in reducing recruitment. Instead of creating conditions for growth, the Chancellor has amplified cost pressures, disrupting supply chains, and pushing manufacturers, in particular SMEs, to prioritise survival over expansion.