EU to water down landmark ban on new petrol and diesel cars
The EU has confirmed it will water down its landmark 2035 ban on the sale of new petrol or diesel cars, yielding to heavy pressure from the car industry and leaders from several EU member states including Germany and Italy.
Under current legislation manufacturers were obliged to ensure that 100% of production of cars and vans had zero emissions up to 2035.
The European Commission confirmed on Tuesday that this will now be reduced to 90%, enabling the continued manufacture of a portion of plug-in hybrid electric cars, or even combustion engines beyond 2035.
However, in a carrot-and-stick approach, the remaining 10% of assembly line output that is not carbon neutral will need to be compensated by other green measures on the factory floor, including the use of green steel made in Europe or use of biofuels in non-electric vehicles.
Closing post
Time to wrap up…. on a day in which unemployment has risen on both sides of the Atlantic….
The US labor market grew by more than expected last month, recovering some of the damage inflicted by the federal government shutdown, according to official data.
An estimated 105,000 jobs were lost in October, and 64,000 were added in November, a highly-anticipated report showed on Tuesday.
Jobs growth was higher in November than anticipated by many economists, with a consensus forecast of some 40,000 jobs added.
But the headline unemployment rate continued to climb – and hit 4.6%, a four-year high, last month – amid apprehension around the strength of the US economy.
Several economists forecast that the weakness of the jobs market could prompt the Federal Reserve to cut interest rates more rapidly than it expects next year.
The rate of UK unemployment rose to a four-year high of 5.1% in the three months to October, as the labour market showed signs of further weakening before last month’s budget.
The Office for National Statistics said the jobless rate was the highest since January 2021 – but with the pandemic era stripped out, it was the highest since early 2016.
Analysts said the rise in the jobless rate made it almost certain that the Bank of England would cut interest rates when policymakers meet on Thursday.
The central bank has said it wanted wages growth to fall further before reducing the cost of borrowing again this year. The latest figures showed wage growth excluding bonuses fell to 4.6% in October, from 4.7% the previous month, the lowest since early 2022.
Young people in the UK have been hit particularly hard: the number of 18- to 24-year-olds out of work, at 546,000, is the highest since 2015 and up 85,000 on the quarter.
“Young people again find themselves at the heart of this downturn, just as they were in the wake of the financial crisis and Covid. Policymakers and employers need to redouble efforts to support them,” said Nye Cominetti, the principal economist at the Resolution Foundation thinktank.
Stocks have opened lower on Wall Street, where the Dow Jones industrial average is down 116 points or 0.24% at 48,300.
James Knightley, chief international economist at ING, says the continuing US job slowdown is keeping pressure on the Federal Reserve to make more interest rates cuts.
Knightley says:
The point that we have repeatedly made is that over the past three years more than 90% of all the jobs the US have created have come in just three sectors – government, private education & healthcare and leisure & hospitality. Government is now becoming a drag while all other private sectors continue to struggle with net job losses in five of the past seven months in aggregate.
The signs of weakness in the US jobs market could encourage the Federal Reserve to cut interest rates more often in 2026 than expected.
Eaarlier this month the Fed released a dot plot of individual forecasts, showing the median prediction of its policymakers is just one further rate cut in 2026.
Seema Shah, chief global strategist at Principal Asset Management, suggests that the Fed may make more cuts than that!
“Powell is likely to view today’s jobs data with a fair degree of scepticism. Not only are there likely to be some data distortions, but tighter immigration policies mean the headline November payroll figure should not be taken at face value – the labor market is not as weak as those numbers might initially suggest. That said, the larger-than-expected rise in the unemployment rate will still trigger some creeping concern within the Fed.
The labour market is cooling – probably not sharply, but enough to warrant some additional monetary easing and, at the very least, a move towards neutral policy rates. The Fed may prefer to see further evidence of economic weakness before its next cut, but based on today’s data, more rate reductions are likely next year than the single cut currently pencilled into the dot plot.”
Lindsay James, investment strategist at Quilter, warns that today’s US jobs report is distorted by some seasonal factors:
“This week marks the beginning of a pre-Christmas US economic ‘data dump’ that is the hangover from the earlier government shutdown. Today’s jobs data comes at a crucial juncture after investors and rate setters were denied the ability to take the temperature of the US economy as they digested tariffs, sweeping changes to immigration policy and emerging signs of a slowdown in the labour market.
Today we get not one but two months of labour market data, but even this will continue to raise questions with both months impacted by various distortions. October data reflects the first month of the US government’s fiscal year, with a sharp decline in federal employment (162,000) coinciding with workers officially leaving government employment under a deferred-resignation arrangement made earlier in the year. This put a huge dent in the overall monthly figures, which saw payroll employment down by 105,000, significantly worse than expected. Whilst jobs did bounce back more than expected in November – up 64,000 compared to forecasts of 50,000 – these numbers remain very subdued compared to the levels typically seen in the post-pandemic years.
“However, it is not clear that this is reflective of a cyclical slowdown. As well as being impacted by the distortions of the shutdown and immigration policy, the US labour market is returning to a more normal footing after a post-pandemic boom in job openings that saw the ratio of openings to unemployed workers rise from around 1.2 to 2. It has now returned to a relatively healthy level of one opening per unemployed worker, a level which is still much higher than the decade prior to the pandemic and one which means we are likely to see wage inflation continuing to ease, reducing pressure on wider inflation metrics but possibly introducing an added headwind to growth.
Chart: US unemployment climbs as payrolls stumble
US lost 105,000 jobs in October as economy loses steam
Newsflash: The US economy lost 105,000 jobs in October, today’s non-farm payroll report shows.
That’s a sizeable loss of employment, partly caused by jobs being shed across the federal government, helping to push the jobless rate up to 4.6% in November.
Daniela Hathorn, senior market analyst at capital.com, says:
Today’s long-awaited Nonfarm Payrolls report finally delivered data covering both October and November, following delays from the government shutdown.
The figures confirm that job growth remains modest and the labour market continues to slow, with 64,000 payrolls added in November after a dip in October, a clear deceleration from prior months.
The unemployment rate rose slightly higher than expected at 4.6%, further softening from earlier in the year, and wage growth continues to ease modestly compared with previous months. All told, this is consistent with a labour market that is losing steam rather than overheating.
Many of the new jobs added across America were in healthcare and construction.
The Bureau for Labor Statistics reports that
In November, health care added 46,000 jobs with job gains in ambulatory health care services (+24,000), hospitals (+11,000), and nursing and residential care facilities (+11,000).
Construction employment grew by 28,000 in November, as nonresidential specialty trade contractors added 19,000 jobs.
But on the downside…
employment edged down in transportation and warehousing (-18,000), reflecting a job loss in couriers and messengers (-18,000).
Federal government employment continued to decrease in November (-6,000).
US lost 26,000 jobs in Augusts
Today’s US jobs report also shows that more jobs were lost across the US in August than previously realised.
It says:
The change in total nonfarm payroll employment for August was revised down by 22,000, from -4,000 to -26,000, and the change for September was revised down by 11,000, from +119,000 to +108,000.
With these revisions, employment in August and September combined is 33,000 lower than previously reported. Due to the recent federal government shutdown, this is the first publication of October data and thus there are no revisions for October this month.
US unemployment rate hits 4.6%
Newsflash: The US economy added 64,000 jobs in November, according to the latest jobs report, just released.
November’s non-farm payroll report, which has been delayed by the recent US government shutdown, shows that the US unemployment rate rose to 4.6% from 4.4% in September.
Employment rose in health care and construction in November, while federal government continued to lose jobs.
Intriguingly, the jobs report also shows there was a spike in layoffs among government staff in October (probably the effect of the Doge programme).
The Bureau of Labor Statistics reports:
Federal government employment continued to decrease in November (-6,000). This follows a sharp decline of 162,000 in October, as some federal employees who accepted a deferred resignation offer came off federal payrolls. Federal government employment is down by 271,000 since reaching a peak in January.
Updated
The pound has touched a two-month high against the US dollar today, as the greenback weakens generally.
Sterling traded as high as $1.3439, its highest level since 20 October.
The dollar has also slipped to a two-month low against the euro, as traders position themselves ahead of the US jobs report in 12 minutes time….
London’s luxury property market is set for its worst year since 2020, Bloomberg reports.
This follows a series of tax measures damped sentiment among wealthy and discretionary buyers, and makes 2025 the second year since 2011 in which no sales above £50 million ($66.8 million) were recorded, according to data from property company LonRes.
Bloomberg adds:
While 2024 saw at least four £50 million-plus deals — including one mansion bought for £139 million — the biggest transactions this year were around the £40 million mark. And data from broker Savills Plc show residential sales above £5 million in the first three quarters of 2025 tumbled 18% from the same period a year earlier, putting them on course to be the fewest since the Covid-19 pandemic locked down London.
The clarity created by November’s budget helped to lift the UK economy in December, says Matt Swannell, chief economic advisor to the EY ITEM Club:
He writes:
The UK flash composite Purchasing Managers’ Index (PMI) rebounded in December. Swings in corporate sentiment rather than genuine changes in private sector activity can often drive the survey’s outturns, so reduced domestic uncertainty after the Budget is likely to have played a major role in today’s data. Moreover, the outlook for the private sector in 2026 remains relatively weak.
The Monetary Policy Committee (MPC) is likely to cut rates later this week, even if the vote is a closer call than markets expect. With today’s survey suggesting that private sector momentum remains modest and businesses are reflecting higher input costs in prices, the MPC will likely remain deeply divided as we move into next year.
BBC Green Paper considers advertising and subscription options
BBC viewers could have to subscribe to a Netflix-style service to watch hit shows such as Traitors and Strictly Come Dancing, and start seeing advertising for the first time, under ambitious options unveiled by ministers to enable the corporation to grow commercial revenues.
The culture secretary, Lisa Nandy, unveiled the potential proposals in the government’s green paper consultation formally launching the process to renew the BBC’s charter for ten years from 2028.
The initial consultation, which will run for 12 weeks before a white paper is published, aims to put the BBC “on a sustainable financial footing”.
“We think there is scope for the BBC to further increase its commercial revenue,” the government said in the green paper. “We are considering a range of options with increasing ambition.”
The paper outlines potential options from targeted advertisements on bbc.co.uk to “full advertising across all BBC platforms”.
Ministers have also raised the prospect of introducing a Netflix-style “targeted top-up subscription service” which could be introduced for access to “historic BBC content”, or be rolled out more expansively to put “commercial programmes behind a paywall”.
The government said:
“Content that remained universally available could include genres such as news, current affairs, factual, and children’s TV.”
However, the government admitted that there would be challenges determining which genres should continue to be offered outside a paywall, such as British dramas like Waterloo Road or major sporting events involving the home nations.
The government said that if it were to allow advertising to run across all BBC services, or introduce a broad subscription service, there would be a reduction in the licence fee.
“These options could further supplement BBC public funding to facilitate greater investment in content and/or enable the cost of the licence fee for households to be managed,” the government said.
The BBC’s income totalled £5.9bn last year but funding has fallen nearly 40% in real-terms since 2010, due to factors including several years of freezes or below inflation licence fee funding settlements, and being forced to take on costs for running the World Service.
A further 300,000 households stopped paying the licence fee last year - which along with payment evasion meant the corporation lost out on £1bn - and by the end of the decade the BBC will lose more than 1 million more paying households, according to the Office for Budget Responsibility (OBR).
“Audiences now have much greater choice in what media they consume, and how and when they do so,” the government said, adding:
“In this environment, where they are now accustomed to accessing advertising or subscription-funded content everywhere, there is a sense among some audiences that the licence fee has become outdated.”
The government said that it will look at options to reform the £174.50 licence fee to “improve its sustainability”.
It is not clear what price a subscription service would be set at, Netflix’s cheapest package, which includes advertising, costs £5.99 a month.
This morning’s rebound in the UK PMI survey suggests the economy is enjoying a post-budget bounce, says Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK.
But there is still a danger that the economy shrinks in the current quarter, he warns.
Pugh explains:
“The rise in the Flash Composite PMI to 52.1 in December from 51.2 in November suggests that the economy recovered a little in December after the budget turned out to be more benign than expected. That won’t be enough to prevent the MPC from cutting interest rates on Thursday. However, a rise in both input and output prices will make the hawks on the committee nervous.
“Both the services and manufacturing PMIs rose in December. The rise in the manufacturing PMI probably continues to reflect the phased restart of Jaguar Land Rover production as new order levels remained similar to November. The rebound in the services PMI is a good sign that activity recovered in December as pre-budget uncertainty dissipated. Indeed, the new orders index recovered almost all of the ground lost in November. That gives us some hope that the economy will finish the year on a stronger note after what is likely to be a weak October and November. However, we still think GDP in Q4 will flatline at best and there is a decent chance of a contraction.
“Meanwhile, the jump in input and output prices is bad news for the Bank of England. While that won’t be enough to prevent a rate cut later this week, it will raise concerns that a rebound in activity will be accompanied by stickier inflation.
UK private sector growth accelerates as optimism rises after budget
Newsflash: UK business growth is accelerating this month, thanks to a rise in new businesses, as the uncertainty created in the build-up to November’s budget fades.
The latest poll of UK purchasing managers shows that business activity growth across the UK private sector economy regained momentum, supported by the strongest upturn in new work since October 2024.
Data firm S&P Global reports that business activity accelerated in both the manufacturing and service sectors
This lifted its global flash UK PMI composite output index up to 52.1 in December, from 51.2 in November, which it says shows “a moderate increase in output levels”.
The PMI report also shows “a modest recovery in business activity expectations for the year ahead”, with business optimism was the second-highest since October 2024.
Chris Williamson, chief business economist at S&P Global Market Intelligence, explains:
“December’s flash PMI surveys brought welcome news on faster economic growth at the end of the year, with businesses buoyed in part by the post-Budget lifting of uncertainty. The PMI is consistent with GDP growth accelerating to 0.2% in December, albeit with a more modest 0.1% gain signalled for the fourth quarter as a whole.
It’s a big relief that business confidence has not slumped in a repeat of last year’s post-Budget gloom. Instead, companies have ended the year on a slightly more optimistic note amid signs of improving demand now that some of the uncertainty created by the Budget has cleared. New orders are in fact growing at the fastest rate for over a year.
However, the overall pace of output and demand growth remains lacklustre, and the expansion is still very dependent on technology and financial services activity, with many other parts of the economy struggling to grow or in decline
However… today’s PMI report shows that firms continued to cut staffing numbers – employment decreased for the fifteenth successive month.
Williamson says firms are worried about rising staff costs:
Job losses are also again worryingly widespread, and it remains to be seen whether the uptick in orders during December will persuade more companies to start hiring again, especially as rising staff costs continue to be reported as one of the key concerns of businesses.
These higher cost pressures were in turn cited as the key cause of a renewed upturn in selling price inflation across both goods and services
Updated
Over in the eurozone, private sector growth has hit a three-month low.
Data provider S&P Global reports that its flash eurozone composite PMI output index has dropped to 51.9, down from November’s 52.8.
More happily, any reading over 50 shows growth, and December’s data shows that Eurozone business activity has completed a full calendar year of growth for the first time since the Covid-19 pandemic.
Oil hits seven-month low below $60 on Ukraine peace deal hopes
In the markets, hopes of a Ukraine peace deal have pushed the oil price down to its lowest level in seven months.
The price of a barrel of Brent crude has dropped by 1% to $59.90, its lowest since early May.
The drop comes after European leaders said they were ready to lead a “multinational force” in Ukraine as part of a US proposal for a peace agreement between Russia and Ukraine
In a statement, the leaders of the UK, France, Germany and eight other European countries said troops from a “coalition of the willing” with US support could “assist in the regeneration of Ukraine’s forces, in securing Ukraine’s skies, and in supporting safer seas, including through operating inside Ukraine”.
The proposal was part of a new package of security guarantees, backed by the White House, that could mark a breakthrough in reaching a peace deal between Moscow and Kyiv, US and European leaders have said.
But, significant differences remained over the future status of the Ukrainian territories occupied by Russia.
The prospect of a peace deal has pushed down shares in defence companies this morning; BAE Systems (-2.2%) are the top faller on the FTSE 100 share index.
Updated
Young people are being badly affected by the weaking jobs market, points out Stephen Evans, chief executive at Learning and Work Institute (L&W):
“Further worrying signs in the labour market with further falls in payroll jobs. Young people, with over one million not in work or full-time education, are among those most affected, and retail and hospitality have shed 129k payroll jobs in a year.
The rise in unemployment to its highest since the pandemic partly reflects a fall in economic inactivity. While this suggests more people are looking for work, it also indicates some are struggling to find work. We need a twin approach of providing more help to find work and creating the conditions for employers to create jobs.”
Thursday interest rate cut 'highly likely' as jobs market slows
Today’s jobs report bolsters the case for the Bank of England to cut interest rates on Thursday, and again in 2026, economists say.
With unemployment its highest in almost four years, and wage growth slowing quickly, the City is confident the Bank will cut interest rates from 4% to 3.75% at its final meeting of the year.
Last month, the Bank split 5-4 when it decided not to cut rates, so only one of those five policymakers need to switch….
Richard Carter, head of fixed interest research at Quilter Cheviot, says today’s jobs figures make a cut seem all the more likely.
“At November’s meeting, the MPC was split almost down the middle, and Andrew Bailey’s deciding vote saw rates held. However, with the economy shrinking - largely thanks to the recent budget and its impact on consumer confidence, spending and business planning - and the outlook for growth rather bleak, a cut is seeming more likely this time around.
“The Bank is still walking a tightrope. While it will want to spur some growth, it won’t want to inadvertently add to inflationary pressures. Nonetheless, should inflation come in lower as expected tomorrow, a rate cut could well be ticked off everyone’s Christmas list.”
ING’s James Smith predicts a cut on Thursday, and two more next year:
Altogether, slowing wage growth combined with further signs of cooling in the wider jobs market hints at the UK becoming less of an outlier on inflation. A rate cut on Thursday is highly likely, and we expect two further moves in the first half of 2026.
Philip Shaw of Investec points out that pay growth, the Bank of England’s favoured measure, slowed – with private sector earnings ex-bonuses slipping to 3.9% in the three months to October from 4.2% in the three months to September.
On its own this report does not provide a case for a cut in the Bank rate on Thursday, but it goes a long way towards demonstrating that long-term inflation pressures are becoming more subdued. A 25bp cut in the Bank rate to 3.75% on Thursday continues to look very likely.
Kathleen Brooks, research director at XTB, also cites the private sector wage growth figures as a reason to cut:
Wage growth moderated slightly, led by the private sector. Private sector wage growth fell below the 4% handle to 3.9% YoY, the lowest level since 2020. Public sector wage growth continues to outpace the private sector, and average weekly earnings moderated only slightly to 4.7% from 4.9% in September.
This was hotter than expected, but we do not see this as an impediment to a Bank of England rate cut later this week. The BOE will look more closely at pay growth in the private sector, and this is moderating to a more reasonable level at a relatively fast pace. This adds to evidence that UK inflation peaked in September, and should give the majority of MPC members the confidence to cut rates.
Deutsche Bank: Peak Budget uncertainty hits labour market
There are worrying signs in the labour market continue as we head towards Christmas, warns Sanjay Raja, chief uk economist at Deutsche Bank Research.
Raja says:
Peak Budget uncertainty has seemingly impacted hiring plans. The jobless rate hit a new cyclical high of 5.1%. Payrolled employees (after another upward revision to October) dropped by 38k in November (expect this to be revised higher too). The redundancy rate also ticked higher to 156k in the three months to October. Much of the increase in the jobless rate, however, rests on higher participation, which increased by 77k in the three months to October (as opposed to the 43k increase in unemployment).
Regardless, signs of slack are rife. The share of marginally attached workers (those outside the labour market wanting a job) have hit a new cyclical high of 23.4% – its highest rate since the onset of the pandemic (and accounts for a substantial 2.1m people). And looking at the breakdown of the jobless rate, it’s the younger cohorts that have been impacted the most. The 18–34-year-old unemployment rate now sits at 8.7%.
ING: Public sector employment has fallen for three consecutive months
ING’s UK economist James Smith has spotted that government hiring is no longer supporting the jobs market.
He writes:
Companies – especially in retail and hospitality – have been shedding workers this year, partly because of earlier tax and minimum wage hikes. Hiring surveys remain weak.
Until recently, that was helpfully offset by resilience in government hiring, but that appears to be changing. Public sector employment has also now fallen for three consecutive months, judging by those payroll numbers.
Payrolls fall by 193,737 since Labour took power
Pat McFadden may blame the jobs data on “the scale of the challenge” Labour inherited, but today’s report also shows that payrolls have been shrinking since the government took over.
In July 2024, the number of payrolled employees peaked at 30,450,219.
The ONS estimates that in November, there were 30,256,482 – or 193,737 fewer than when Keir Starmer and Rachel Reeves moved into Downing Street.
Hannah Slaughter, senior economist at the Resolution Foundation, says policymakers must take action:
“The labour market is ending the year with a whimper, with falling job numbers and weakening wage growth.
“This means that Britain is likely to usher in 2026 with rising unemployment and the risk that pay packets could start shrinking again. Policy makers need to react to these trends.
“For the Bank, the latest data shows that there may be more space to cut interest rates beyond Thursday’s expected cut. The Government too should be razor focused on Britain’s burgeoning unemployment challenge and redouble efforts to support job creation.”
ICAEW: Budget speculation and slumping economy hurt jobs market
Suren Thiru, ICAEW economics director, warns that the UK jobs market faces ‘a harsh winter’, and blamed the flood of speculation ahead of last months’s budget:
“The UK’s jobs market visibly buckled ahead of the Budget as the unrelenting uncertainty from a torrent of policy speculation and a slumping economy forced more firms to reduce recruitment and curb wage settlements.
“Pay growth should continue easing over the coming months as the squeeze from surging staffing costs and rising unemployment further weakens workers’ negotiating position, despite some upward pressure from the forthcoming minimum wage hike.
“The UK labour market is facing a harsh winter with a perfect storm of surging business costs, including the impending minimum wage rise, and declining customer demand likely to lift unemployment unnervingly higher from here.
IoD: It's the government's fault
The Institute of Directors has laid the blame for rising unemployment firmly at the government’s door, calling today’s labour market figures an indictment of its employment policies.
Alex Hall-Chen, principal policy advisor for employment at the Institute of Directors:
“Today’s data shows a further softening of the labour market, with the number of payrolled employees down 0.1% on the month and an increase in the unemployment rate to 5.1%.
“These figures are an indictment of the government’s approach to employment policy; the combined effect of the Employment Rights Bill, employer’s National Insurance increase, and above-inflation increases to the National Living Wage are stifling employer demand for labour.
Yesterday, several business groups (not including the IoD) urged Conservative peers to stop blocking Labour’s workers’ rights bill, following a deal under which new workers would get protection against unfair dismissal after six months, not from day one of employment as previously proposed.
Hall-Chen says more changes are needed:
“While the government’s climbdown on day one unfair dismissal rights is a welcome step, this alone will not turn the tide on job creation. Significant movement on trade union reforms and guaranteed hours provisions, alongside measures to reduce the overall cost of employment, are needed to encourage employers to hire staff.”
McFadden: today’s figures underline the scale of the challenge we’ve inherited
The Work and Pensions Secretary has blamed the rise in unemployment on the “scale of the challenge” Labour inherited when it took power 16 months ago.
Pat McFadden said:
“There are over 350,000 more people in work this year and the rate of inactivity is at its joint lowest in over five years, but today’s figures underline the scale of the challenge we’ve inherited.
“That is why we are investing £1.5 billion to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.
“To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work.”
29,733 people at risk of redundancy in November
The spectre of redundancy is stalking the UK jobs market.
The ONS reports that 29,733 employees are at risk of redundancy, based on the HR1 firms which employers must file if they’re planning to lay at least 20 staff off.
The number of people made redundant in August-October rose to to 5.3 per 1,000 employees, which is an increase on a quarterly basis and also over the last year
Updated
Key event
Inflation continues to take a large bite out of pay growth.
Using the Consumer Prices Index, annual real regular pay growth (ie, excluding bonuses) was 0.9% in August to October 2025, which is slightly up on the previous three-month period (0.8%).
But annual real total pay growth (including bonuses) fell to 1.0% in August to October 2025, which is slightly down on the previous three-month period (1.1%). That’s the lowest reading since May to July 2023.
UK unemployment rose by 158,000 in the August-October quarter, to a total of 1.832m, lifting the jobless rate to 5.1%.
The number of people in employment dipped by 16,000 in the quarter to 34.226m, which pushed the UK employment rate down to 74.9%.
Public sector pay outstrips private sector
Today’s jobs report also shows the wages in the UK public sector are rising nearly twice as fast as in the private sector.
Annual average regular earnings growth was 7.6% for the public sector and 3.9% for the private sector in August to October.
This is partly due too some public sector pay rises being paid earlier in 2025 than in 2024, causing a base effect.
ONS director of economic statistics Liz McKeown explains:
“Wage growth slowed further in the private sector, while increasing again in the public sector, reflecting the continued impact of some pay rises being awarded earlier than they were last year.”
Introduction: UK unemployment rate hits 5.1%
Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.
Jobs reports from from both sides of the Atlantic are in focus today, as we get our final health check on the labour markets in the UK and the US.
And the breaking news is that Britain’s unemployment rate has hit a new four-year high, as firms continue to cut jobs.
The UK’s unemployment rate has risen to 5.1% in the August-October period, up from 5% a month ago, to its highest level since the three months to January 2021.
Unemployment rose, again, as the number of people on company payrolls fell; by 149,000 between October 2024 and October 2025, and by 22,000 in October alone.
The ONS also estimates that payrolled employees for November 2025 decreased by 171,000 on the year, and by 38,000 (0.1%) on the month, to 30.3 million.
And with the jobs market cooling, wage growth has slowed again too.
Average earnings, excluding bonuses, rose by 4.6% in the quarter, down from 4.7% a month ago. Total pay growth (including bonuses) slowed to 4.7% from 4.9%.
That weakening in pay growth may encourage the Bank of England to cut interest rates on Thursday.
ONS director of economic statistics Liz McKeown said:
“The overall picture continues to be of a weakening labour market. The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.
“This weakness is also reflected in an increase in the unemployment rate, while vacancies remained broadly flat. The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.
We’ve published the latest labour market figures.
— Office for National Statistics (ONS) (@ONS) December 16, 2025
Commenting on today’s figures, ONS Director of Economic Statistics Liz McKeown said: (quote 1 of 3) 💬
Read the latest Labour market overview ➡️ https://t.co/xbKU1Ff47P pic.twitter.com/nXZT956hz2
Liz McKeown went on to say: (quote 2 of 3) 💬 pic.twitter.com/qijfwOKzn3
— Office for National Statistics (ONS) (@ONS) December 16, 2025
Later today we’ll finally get the delayed US non-farm payroll report for November, showing how many jobs were created last month. This report was held up by the US government shutdown, which also meant October’s report was cancelled.
The agenda
7am GMT: UK labour market report
9am GMT: Eurozone flash PMI report for December
9.30am GMT: UK flash PMI report for December.
10am GMT: Eurozone trade balance report for October
1.30pm GMT: US non-farm payroll jobs report for November
1.30pm GMT: US retail sales for October
Updated
