United Kingdom

JPMorgan: UK Unemployment to Hit 5.5%, Surpass Pandemic Peak

Is the U.K. jobs market collapsing under government policies or has it stabilized and is poised for recovery?

Published FEB 24

JPMorgan: UK Unemployment to Hit 5.5%, Surpass Pandemic Peak

Story

Above: A view towards the financial district and Wentworth Street in London on Feb. 20. Image credit: Richard Baker/Getty Images

The Facts

JPMorgan economists predicted that U.K. unemployment would reach 5.5% by late spring, surpassing the pandemic peak of 5.3% recorded in December 2020. Allan Monks, chief U.K. economist at JP Morgan, said the jobs market remains stagnant more than a year after tax increases.
City AM
The Telegraph
Monks said the rise in employers' national insurance "disproportionately affected" firms with "higher proportions of lower paid workers," especially in retail and hospitality. The bank also noted that AI adoption is suppressing hiring in sectors like business services and finance.
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Express.co.uk
JPMorgan forecasted that the weakening labor market should prompt the Bank of England to deliver two more interest rate cuts by June, reducing rates from 3.75% currently to 3.25%. Bank rate-setter Alan Taylor, who voted for an immediate cut to 3.5%, said two to three more cuts were needed.
City AM
The Telegraph
In a worst-case scenario, JPMorgan warned that unemployment could continue rising towards 6% by year's end if the job market doesn't recover as anticipated. Monks anticipated that a fiscal-related drag on job growth should fade as business confidence improves.
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The Telegraph
The number of payroll employees in the U.K. fell by 121,000 between December 2024 and December 2025, according to administrative data from HM Revenue and Customs. The early estimate for January 2026 showed payroll employees decreased by 134,000 on the year to 30.3 million.
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Office for National Statistics
Job vacancies in the U.K. dropped by 3% in January to 695,000, the lowest level in five years and the first time advertised vacancies fell below 700,000 since January 2021, according to job website Adzuna. Meanwhile, 1 million people aged 16-24 are "not in education, employment or training," according to analyst Alan Milburn.
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guardian
Daily Mail

Sources Split

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CENTER

RIGHT

ESTAB
CRIT

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PRO
ESTAB

The Spin

Narrative A

The jobs market is collapsing under the weight of disastrous government policies, with unemployment set to surge past pandemic levels to 5.5% as businesses refuse to hire after getting hammered by a £25 billion ($17.3 billion) National Insurance raid and reckless minimum wage hikes. Young workers are being priced out of the market entirely, with youth unemployment hitting 16.1% — the highest in over a decade — while graduate hiring has plummeted by well over 10% in recent years.

American Spectator

The Telegraph

Narrative B

The labor market has actually stabilized and is poised for recovery, with data revisions showing 50,000 fewer job losses than initially reported and worker churn picking up — a clear sign the bottom has been reached. Employment is still rising alongside unemployment because more people are entering the workforce, which reflects healthy participation rates rather than mass layoffs. Incoming rate cuts will also support gradual improvement.