UK Unemployment Falls Slightly as wage Growth Plateaus
London, October 14, 2025 – The UK unemployment rate edged down to 4.2% in the three months to August, according to data released today by the office for National Statistics (ONS). This represents a slight increase of 0.3 percentage points from predictions by Bloomberg economists.
The figures are being closely watched by Bank of England officials amid concerns that sustained wage growth and persistent inflation could create a feedback loop, making it more challenging to bring price increases under control. The ONS data indicates wage growth has stalled, offering a potential, though limited, respite from inflationary pressures.
Bank of England external member Catherine Mann recently advocated for maintaining “restrictive” interest rates to curb inflation expectations. Her comments suggest a push to hold rates at four per cent at the upcoming November meeting, a decision currently described as finely balanced.
Economists anticipate that Governor Andrew Bailey’s vote will be decisive, potentially splitting the Monetary Policy Committee between hawks and doves. The August meeting required a second vote after Alan Taylor initially favoured a 50 basis point cut, citing concerns about a weakening jobs market and its potential impact on price growth.
Other policymakers have highlighted the risk that elevated wage growth could fuel further inflation and keep expectations high. The ONS is scheduled to release September inflation data next week,with forecasts suggesting price growth could reach as high as four per cent – double the Bank of England’s two per cent target.
