UK’s unemployment falls unexpectedly ahead of budget

Britain's unemployment rate unexpectedly fell to 4.7% in the three months ending August, according to official data released on Tuesday. This marked a significant drop, dropping below the analysts' forecast of 4.9% unemployment. The Office for National Statistics reported that this was the lowest rate since the same period in 2025.

The news is a boost for Labour leader and Prime Minister Andy Burnham, who faces tough decisions in his upcoming budget presentation on October 28th. Rising youth unemployment is a major concern for the government, which aims to tackle the cost of living crisis. Burnham expressed concern over one million young people aged 16-24 who are not in employment, education, or training.

He warned of the potential for an economic catastrophe and moral failure unless these young people are invested in. A government-commissioned review on youth unemployment, led by former Labour cabinet minister Alan Milburn, will publish its findings next month. Burnham has pledged to provide clear support to young people, alongside major changes to the welfare system.

The government also announced plans to recruit thousands more apprentices under 25 in various sectors such as accounting, law, and consulting. However, Richard Carter, head of fixed interest research at Quilter Cheviot, cautioned that while signs of a stabilising labour market are welcome, the recovery remains fragile. Finance Minister John Healey, who will present the budget, pledged to maintain strict fiscal discipline as inflation rises and government bond yields reach multi-decade highs.