The latest labour market data issued by the Office for National Statistics shows another rise in unemployment, while average earnings have eased. 

Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce said: “The latest data paints a gloomy picture for jobs, opportunities and growth.

“It reflects what businesses tell us – they are less confident about hiring staff due to sky-high employment costs and a tidal wave of new employment legislation coming down the track.   

“While there has been some easing of cost pressures - with average earnings including bonuses slowing to 4.7% in the three months to October - labour costs remain a challenge.”

Nearly three quarters (72%) of businesses in the BCC’s latest survey said labour costs are the biggest cost pressure they are facing. 

The results of Shropshire Chamber’s latest quarterly economic survey, published earlier this month, showed costs are still outpacing turnover growth for businesses, prompting many employers to shed staff or scale back on recruitment.

The survey – which feeds results into national policy-makers – collected the majority of its feedback immediately before Chancellor Rachel Reeves’ latest budget.

Many businesses said they were still feeling the effects of her 2024 announcements, which piled on extra staffing costs – and said wage demands were showing no sign of easing.

Jane Gratton said: “There is a limit to how much additional cost firms can absorb without an impact on investment and growth. The further increase in unemployment, hitting 5.1% in October, is also a clear sign of the sluggish economy.  

“We need a laser like focus on stimulating growth and boosting investment, trade, innovation and skills. The Government must work in partnership with business to make 2026 a year of delivery.”