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Britain is enduring a 'jobs drought' under Labour after vacancies fell to a 12-year low and unemployment rose, official figures show.

Yesterday's bleak report revealed many firms have stopped hiring as they face rises 'in labour costs and other operating expenses'.

That is likely to reflect the ongoing impact of Labour's £25billion raid on employer National Insurance as well as sharp rises in the minimum wage and surging energy costs.

Firms are also worried about the impact of new workers' rights rules spearheaded by Angela Rayner.

The Office for National Statistics (ONS) revealed there were just 707,000 job openings in the three months to July. Excluding the pandemic, it was the lowest level since November 2014.

Business groups said it showed the jobs market is stagnating – and it is workers in the private sector who are paying the price, with pay growth slowing to 2.8 per cent.

That is barely enough to keep pace with inflation and less than half the 6.1 per cent average rate being enjoyed by public sector staff.

The Government's Insolvency Service also revealed the pressure is overwhelming more firms, with 1,931 going bust last month, up 5 per cent on the month before.

Ben Harrison, head of the Work Foundation think-tank, said: 'The figures indicate the UK remains trapped in a deepening jobs drought.'

Angela Rayner at West Midlands Fire and Rescue Service HQ in Birmingham on August 17, 2026

Conservative shadow business secretary Andrew Griffith speaks to the media on College Green in Westminster, London on November 25. 2025

The headline figure for unemployment in the three months to June remained unchanged at 4.9 per cent, according to the ONS.

But the single month figure for June was 5.4 per cent, up sharply from 4.6 per cent the month before. It was 3.8 per cent just before Labour came to power. Unemployment has not been higher – on this measure – since 2015, excluding the pandemic.

It tallies with forecasts, including from the Bank of England, that the headline jobless rate will climb above 5 per cent this year.

The ONS also revealed the number of employees on UK payrolls fell by 13,000 in July. It is down by 94,000 over the past year and 183,000 since just before the election.

The young remain worst affected with unemployment among 16 to 24-year-olds at 16.2 per cent or 739,000.

Tory business spokesman Andrew Griffith said: 'These figures continue to show that Labour isn't working. Unemployment remains high while there were almost 100,000 payrolled jobs lost over the year thanks to Labour's attacks on business.'

The number of people on benefits not expected to look for work now far outnumbers those seeking work, Department for Work and Pension figures showed yesterday.

Half the record 8.4million people claiming universal credit were in the no work-related category in May, with just 1.6million required to search for work.

In his review of youth inactivity, former health secretary Alan Milburn said: 'More and more people believe hard work is not rewarded.

'That undermines the promise that has been at the heart of our country's social contract – if you put in effort, you will be able to get ahead.'