UK Unemployment Rate 2027: Shocking 5.1% Rise as 150,000 Jobs at Risk. The unemployment rate is expected to jump to 5.1% as more than 150,000 individuals are set to lose their jobs next year.
Leading economists at the ITEM Club have warned that a sluggish labour market will deal a further shock to British households.
The forecasting agency forecasts companies throughout the nation will stop recruiting as they struggle with a tough economy.
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The squeeze is already being felt by hotels and events that depend on people spending money on hospitality.
Now these companies are struggling to cope with big increases in the National Living Wage and recent increases in employers’ National Insurance contributions.
In the meantime the increasing industries are not generating a lot of new jobs.
AI Growth Fails to Create More Jobs
The ITEM Club research says output in the IT and professional services sectors is increasing as they spend more in artificial intelligence.
But that tremendous technological growth has not yet led to any major rise in hiring in those profitable businesses.
“This cocktail of pressures means the national unemployment rate is forecast to peak at 5.1 per cent in mid-2027.
This bleak prediction amounts to around 150,000 additional people becoming unemployed.
UK Unemployment Rate Forecast to Reach 5.1%
The official jobless rate recently dropped from 4.9% to 4.7% in the three months to August.
However, the ITEM Club cautions this autumn may be misleading and likely exaggerates any underlying improvement in the jobs sector.
The sluggish labour market will also have a serious knock-on effect for individuals who manage to retain their positions.
Salary Growth Expected to Slow Next Year
Economists predict salary growth in the private sector to fall from 3.5% this year to just around 3% next year.
The dismal hiring backdrop will limit workers’ capacity to demand substantial wage raises from their current bosses.
It will also make it much harder for ambitious staff to jump to different organisations in pursuit of greater profits.
Inflation and Rising Energy Prices Add to Household Pressure
The bleak jobs outlook comes as people brace for inflation to reach above 4% in early 2023.
Rising wholesale petrol prices are fuelling this surge in everyday living costs, which will filter through to residential energy bills in January.
But the ITEM Club research does provide some promise for the future of the economy.
UK Unemployment Expected to Recover by 2028
By the end of 2028, experts think the unemployment rate should gradually rebound and return to 4.7%.
This should improve once the present energy price shock subsides and inflation comes down to normal levels.