UK unemployment rate falls for first time since 2024

The unemployment rate has fallen to 4.9% in the three month period to February 2026, down from 5.2% where it had been predicted to stay.

In the North West, the fall was even sharper, with unemployment at 4.6%, down 0.4 percentage points on the previous quarter.

However, rather the rate of employment has not risen by an equivalent amount to make up the difference, with the number of people in work across the UK also falling 0.1% on September to November data, and rising by just 0.1% in the North West.

Instead, the fall in unemployment has largely come from an increase in economic inactivity, people aged 16 to 64 who are out of work but not actively seeking employment, such as stay-at-home parents. Across the UK, this amounts to 21% of the working age population, and 22.6% in the North West.

According to ONS data, the rise in economic inactivity between December 2025 and February 2026 has largely come from an increase in young people, aged 16 to 24, with the rate decreasing slightly or remaining unchanged among older segments of the population.

Looking ahead, the forecasts for unemployment figures anticipate the numbers out of work will continue to rise as businesses scale back hiring plans amid the uncertainty of conflict in Iran. As a net importer of oil and gas, the UK economy is particularly susceptible to volatility in fuel prices and IMF forecasts for growth have already been downgraded from 1.3% to 0.8% since the conflict began.