BBC NewsBorrowing was £17.4bn last month, the second highest October figure since monthly records began in 1993.
Finito World
The latest unemployment figures should give ministers pause. At 5.2%, the UK jobless rate now sits close to a five-year high. That number, on its own, does not signal catastrophe. We are not in pandemic territory. But look beneath it and a more troubling picture emerges: weak hiring activity, rising redundancies, and an increasing number of unemployed people chasing each vacancy. The ratio of jobseekers to available roles has reached a new post-pandemic high.
This is not simply a cyclical wobble. It is a signal about confidence.
The Office for National Statistics is clear: hiring has slowed. Vacancies have plateaued. Private sector wage growth has eased to its lowest rate in five years. When businesses slow recruitment at the same time as more people begin actively looking for work, something has shifted in the mood of the labour market.
The political responses were predictable. The government points to 381,000 more people in work since the start of 2025 and emphasises its £1.5 billion youth employment drive and plans to expand apprenticeships. The opposition blames higher employer National Insurance contributions, business rates and “anti-business red tape” for choking off demand for labour.
Both arguments contain truth. But neither fully captures the underlying challenge.
The labour market is adjusting to a new cost base. Employer National Insurance increases, higher minimum wages and regulatory reforms all raise the marginal cost of hiring. For large corporates, this is absorbable. For SMEs — who create the majority of new jobs — it alters behaviour. Hiring becomes cautious. Roles go unfilled. Automation becomes more attractive. Contractors replace permanent staff.
At the same time, we have a generation entering the workforce with heightened expectations and fragile confidence. Youth unemployment remains structurally higher than the national average. The government’s apprenticeship push is sensible — but apprenticeships only work if employers are confident enough to expand.
There is also a psychological dimension. The pandemic rewired work. AI is rewiring it again. Employers are asking different questions: Do we need this role? Can software do part of it? Can we restructure instead of recruit? That produces what economists politely call “labour market friction” — but for a 22-year-old graduate or a 54-year-old redundant manager, it feels like paralysis.
The wage figures are equally instructive. Public sector pay growth remains strong at 7.2%, while private sector growth has slowed to 3.4%. That gap matters. It influences labour flows. It shapes morale. And it reinforces the perception that risk sits disproportionately in the private economy — precisely where job creation must occur.
So what does this mean for the future of work?
First, employability will increasingly trump entitlement. The days when a degree or a job title guaranteed progression are fading. Skills, adaptability and commercial literacy matter more than ever.
Second, policy must balance worker protection with employer confidence. Raising standards is laudable; pricing risk into hiring decisions is not. Governments rarely admit this tension, but it exists.
Third, productivity — not redistribution — remains the only sustainable answer. If businesses grow, they hire. If they hire, unemployment falls. Without growth, every labour market intervention becomes a reshuffling exercise.
We are not in crisis. But we are at an inflection point.
A labour market can absorb higher costs and tighter regulation when confidence is high. It cannot when uncertainty is layered upon uncertainty.
The danger is not today’s 5.2%. It is a prolonged period of cautious hiring that leaves young people stuck, mid-career workers anxious, and employers hesitant.
Work remains the primary engine of dignity, mobility and social cohesion. If hiring stalls, the consequences are not merely economic — they are cultural.
The numbers this morning are not yet alarming. But they are whispering something important: confidence is softening. And when confidence fades, opportunity follows.
