Youth unemployment in the United Kingdom has risen to its highest level in more than a decade, according to new figures from the Office for National Statistics (ONS). In the three months to December 2025, 16 to 24-year-olds faced an unemployment rate of 16.1 per cent, equating to nearly 740,000 young people out of work. This represents an increase of roughly 120,000 in under a year.
The rise is sharp compared with the first quarter of 2024, when youth unemployment stood at 14.2 per cent, or around 620,000 people. Young workers now account for nearly half of the total increase in unemployment across the economy, despite representing just 13 per cent of the working-age population.
Economists describe the current spike as unusual, noting that older age groups have not seen a comparable rise in joblessness. Peter Dixon, senior economist at the National Institute of Economic and Social Research, said younger workers were being “priced out of the market.” Louise Murphy of the Resolution Foundation added that almost one in six young people who want work cannot find a job.
The surge has been linked in part to recent fiscal policy changes. Higher employer national insurance contributions and compressed minimum wage differentials between age bands have raised labour costs for industries such as hospitality, retail, and leisure, which traditionally provide entry-level opportunities for students and school leavers. Analysts also anticipate further pressures in April, when additional provisions of the government’s Employment Rights Act, including expanded sick pay entitlements, come into force.
Despite the rise in unemployment, there is some positive news. Economic inactivity among young people has returned close to pre-pandemic levels, suggesting more are actively seeking work. Yet many continue to struggle to secure positions, heightening fears of a “lost generation” of workers entering the labour market amid a challenging economic environment.
The weakening youth labour market has reinforced expectations that the Bank of England may act to support growth. Financial markets increasingly anticipate a reduction in the base rate from 3.75 per cent to 3.5 per cent at the central bank’s monetary policy meeting on 19 March. Analysts at Bank of America said the rise in unemployment and slowing wage growth “keeps us comfortable with our base case of a March cut,” while ING economist James Smith described the report as keeping the Bank “firmly on track” for a reduction.
The Bank of England has previously noted that downturns in employment often hit younger cohorts first. Current trends could signal broader weaknesses in labour demand if not addressed. With inflation easing and economic growth subdued, policymakers face the challenge of ensuring that temporary spikes in youth unemployment do not become long-term structural issues.
