Unemployment Up As Businesses Battle Costs

14th October 2025

Responding to the latest labour market data published by the ONS this morning, Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce said:

“Unemployment continues to edge up while job vacancies continue to fall. These are clear signs that employers are holding back on recruitment under the burden of soaring employment costs.  

“We would normally expect a loosening of the labour market to lead to an easing in average earnings. But, while the rate of growth has slowed, they remain above inflation, adding to pressure on businesses’ balance sheets.? 

“Our latest survey shows that labour costs remain the biggest cost pressure for SMEs, cited by 72% of firms. Firms tell us the increase in employer NICs is the biggest driver of this. As a result, we are unlikely to see any further cuts in Bank of England interest rate this year.  

“Firms are increasingly fearful of any further increase in costs in the Budget, which they simply won’t be able to absorb. Already, firms are bracing themselves for an additional £5bn cost associated with the Employment Rights Bill, which will threaten investment plans, increase risk and impact on opportunities for people in the labour market. 

“That's why we are clear, there must be no more taxes on business in November’s Budget. The Chancellor must also use her statement to invest in workforce health and skills to help more people thrive in work.” 

Read the full ONS data here.