Let’s talk about jobs. In the three months to October, the number of redundancies rose to its highest level since February 2021, unemployment increased to 5.1 percent, and youth unemployment to 16%. Many fear that the labour market will deteriorate further next year as businesses continue to cut costs and the big increase in wages for younger workers in the Budget could actually do more harm than good, making it more expensive to recruit those in the early part of their careers. High levels of youth unemployment can have far-reaching consequences for both business and the wider economy, with people aged 16–24 often acting as a pipeline of future talent. When this group struggles to find work, the effects can persist for years.
One major economic impact is the loss of productivity and potential growth. Prolonged unemployment at a young age can lead to skills erosion, lower confidence, and reduced employability, making it harder for individuals to contribute fully to the labour market later in life. This in turn can reduce lifetime earnings and lower overall economic output. As a result, government tax revenues fall while spending on benefits and support services increases, placing additional strain on public finances.
There are also longer-term demand-side effects. Unemployed or underemployed young people have lower disposable incomes, reducing consumer spending. Since young consumers are important drivers of demand in areas such as housing, leisure, fashion and digital services, weaker spending can dampen business revenues and further slow economic recovery.
The social consequences also matter for the economy. Persistent youth unemployment can be linked to poorer mental health, higher inequality and reduced social mobility, which can undermine social cohesion and economic resilience. Addressing youth unemployment through apprenticeships, targeted training, and closer collaboration between education providers and employers should therefore not only be a social priority, but an economic necessity for sustaining UK business competitiveness and long-term growth.
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