Feature article:

Unemployment – the spectre returns?

The rate of unemployment in the UK seemed to disappear from the headlines for many years. However, it looks to have crept up the news agenda again in recent months. Unemployment hit 5.2% early in 2026, the highest rate for five years. The latest data may show the headline figure contracting slightly, but it is the trend that is concerning.

This paper aims to help investors to understand:

• how to define unemployment and explain frictional unemployment;
• why looking only at the overall rate for the UK may hide serious problems;
• why unemployment matters to the government, Bank of England, society and individuals; and
• the factors contributing to rising unemployment in the UK.

Unemployment can have a corrosive impact on everyone. Even those in employment are affected as governments respond to fiscal pressures by putting up taxes and cutting expenditure on non-welfare areas.

Unemployment undermines confidence, blights people’s life chances and corrodes society. Many recent government initiatives mean well but do not end up doing good. Indeed, they may be acerbating the problem rather than curing it.

Download the full report