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The United Kingdom (UK)’s unemployment rate has fallen unexpectedly to 4.7 percent, giving Prime Minister Andy Burnham’s Labour government a boost before its budget presentation on October 28, 2026.
The Office for National Statistics (ONS) reported on Tuesday that unemployment fell to its lowest level since the three months to the end of July 2025, according to AFP.
The rate dropped from 4.9 percent, contrary to analysts’ forecasts that it would remain unchanged in the three months to the end of July 2026. The figures come as the government prepares to make difficult economic decisions in its upcoming budget.
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However, youth unemployment remains a major concern. The government has made tackling the cost of living a key part of its agenda. On Sunday, Burnham warned that Britain faced an “economic catastrophe and moral failure” because around one million people aged 16 to 24 were not in employment, education or training.
“We either invest in the success of our young people or pay for failure through the benefits system,” Burnham wrote in The Times.
A government-commissioned review of youth unemployment, led by former Labour cabinet minister Alan Milburn, is expected to publish proposed solutions next month. Burnham has promised a “clear guarantee of support” for young people, alongside “big changes” to the welfare system.
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On Monday, the government also outlined plans to recruit thousands more apprentices under 25. The opportunities will cover sectors such as accounting, law and consulting. Despite the fall in unemployment, experts have warned that the labour market remains fragile.
“Signs that the labour market may be stabilising are welcome, but the recovery remains fragile, and the government will not want to do anything that further discourages businesses from hiring,” said Richard Carter, head of fixed interest research at Quilter Cheviot.
The figures come as inflation rises and government bond yields reach multi-decade highs. Finance Minister John Healey, who is due to present the budget, has pledged to maintain strict fiscal discipline following the economic pressures.
