Warning that unemployment remains a threat
According to the latest labour market statistics released by the Office for National Statistics (ONS), the number of payrolled employees fell by 109,000 (0.4%) over the year to January 2026 and by 31,000 (0.1%) over the quarter from November 2025.
The Labour Market Overview, UK: March 2026 also highlights that the early estimate of payrolled employees for February 2026 decreased by 49,000 (0.2%) on the year but increased by 20,000 (0.1%) on the month, to 30.3 million.
The UK unemployment rate for people aged 16 and over was estimated at 5.2% in November 2025 to January 2026. This is up in the latest quarter and above estimates of a year ago, the ONS points out.
The latest figures have caused concerns in the British Chambers of Commerce (BCC), with Head of Research, David Bharier, saying that there are clear signs that pressure is growing on the labour market, with the BCC’s own latest forecast expecting it to climb to 5.5% this year.
“Three major factors could shape the outlook,” Mr Bharier argues, “high and rising labour costs, the proliferation of AI and growing uncertainty caused by the conflict in Iran. Labour costs remain the biggest cost pressure for businesses, cited by 72% in our latest quarterly survey.”
With conflict in Iran set to drive higher inflation and weaker growth, he concluded with a warning of the risk of stagflation — a combination of slow growth, high inflation and rising unemployment.
