Unemployment yet to peak, warns think tank

29 Aug 2025

Although the unemployment rate has risen this year it is yet to peak, according to analysis by think tank the Resolution Foundation.

The Foundation has constructed an alternative unemployment rate estimated on a range of labour market data which aligns closely with the official unemployment rate – both the official rate and the Foundation's estimates rose from 4.4% in April 2024 to 4.7% in April 2025.

According to the think tank, while these alternative estimates point towards the reliability of the official figure, they are also able to make use of more recent labour market data (such as payroll jobs, vacancies and wage growth) to create a 'nowcast' of the official rate.

According to these estimates, the unemployment rate has continued to rise in the latest months and has not yet peaked.

Gregory Thwaites, Research Director at the Resolution Foundation, said: 'Our alternative unemployment rate – based on a wide range of labour market data – indicates that unemployment has not yet peaked.

'While our analysis confirms that official measures of unemployment are accurate, it worryingly indicates that economic inactivity has been on an upward trajectory for the past two years, contradicting earlier analysis.

'The ongoing loosening of the labour market appears to be taking the form of a hiring freeze rather than a firing spree, but this is still bad news for jobseekers as vacancies look set to continue being scarce.'