Nearly a million 16-to-24-year-olds in Britain are now classified as NEETs, not in employment, education, or training, as the labour market deteriorates sharply.
The unemployment rate has climbed to around five per cent in the first half of 2026, up from roughly four per cent when Labour came to power in July 2024, with vacancies falling below 700,000 for the first time in five years.
Behind those figures lies a wave of corporate redundancies that has swept through the country’s largest employers, stripping away at least 137,000 jobs over just two years.
A City AM analysis drawing on more than 250 media reports of layoffs, redundancy programmes, and company administrations identified the scale of losses across Britain’s biggest businesses since Labour took office.
Retail and hospitality bore the heaviest burden, accounting for roughly 45,000 of the positions lost, as thousands of shops, pubs, and restaurants shut their doors across the country.
Financial, legal, and professional services contributed around 30 per cent of total job losses, with Barclays (BARC) alone warning it expects to shed up to 5,000 roles as automation replaces headcount across its operations.
Other major names feature prominently in the data, including Jaguar Land Rover with up to 4,000 planned cuts, Whitbread (WTB) with 3,800 roles eliminated, and Sainsbury’s (SBRY) which reduced its workforce by 3,000 last year.
Official redundancy figures have tracked the corporate announcements closely, with the rate rising from two per 1,000 employees in September 2023 to five per 1,000 by September 2025, while Google search data shows queries for the word “redundancy” have doubled across the same period.
Economists point to surging employment costs rather than artificial intelligence as the primary culprit, with Ben Caswell, senior economist at the National Institute of Economic and Social Research, highlighting the burden placed on businesses hiring at the lower end of the pay scale.
“For an entry-level worker, it was a ten per cent increase in the unit labour costs of hiring someone in just a single year,” Caswell said, adding that this was “going to be a pretty big driver for reducing vacancies.”
Caswell also pushed back on narratives attributing the jobs slowdown primarily to automation, noting there was no “smoking gun evidence” that AI had been a major factor, and that the vacancy decline was “quite broad-based” rather than concentrated in sectors most exposed to technological disruption.
Hospitality businesses have been among the hardest hit by the combination of rising costs and weakening consumer spending, according to insolvency specialist Molly Monks of Parker Walsh, who said the sector has dominated her caseload.
“Profit margins are so small, and the footfall isn’t what it was, that people are just finding everything a little bit too tight,” Monks said, warning that “once you slip, it’s very difficult to get back — it’s a very fast downward spiral.”
She added that surging business rates, rent, and staffing bills had left operators with almost no room to absorb further shocks, describing employees as having become “very expensive” for struggling firms.
The pressure on employers is set to intensify, with Chancellor John Healey expected to announce another above-average minimum wage increase at today’s Budget, compounding national insurance hikes and tightened employment laws already in effect.
Shadow chancellor Andrew Griffith was unsparing in his assessment, telling City AM: “There is a direct connection between the jobs tax and firms laying off staff. It was entirely foreseeable that when you put up the cost and the risk of something, you’ll get less of it. But with almost zero business experience in the Cabinet, Labour didn’t listen.”