Photo: Sven Hansche, Shutterstock
Save
London’s jobs market is deteriorating fast, with unemployment almost doubling in less than two years and retail and hospitality bearing the brunt of the downturn.
Official figures from the Office for National Statistics show London’s unemployment rate jumped to 7.2% in the September-November 2025 quarter, the highest in the country and the worst for the capital since the winter 2021 lockdown.
That compares with a low of 3.8% in the three months to January 2024, meaning the share of Londoners out of work has almost doubled in under two years.
London unemployment rate doubles in less than two years
The number of payrolled employees in London fell by 1.1% over 2025, the sharpest annual decline since the pandemic, underlining how the capital has been hit harder than any other UK region.
Westminster recorded the steepest local fall in employment of any authority in the country, with jobs down 3% in the year to December, signalling strain in the West End’s visitor‑ and office‑dependent economy.
Young people, Newham and East Ham hit hardest
The pain is not being shared evenly. Younger Londoners are facing the most acute jobs crisis, with the youth unemployment rate rising from 16.6% to 18.8% in the year to September. By contrast, unemployment among 35 to 49‑year‑olds remained broadly steady at 3.9%, highlighting a stark generational divide in labour market security.
The highest joblessness in the UK is now found in London
Geographically, the highest joblessness in the UK is now found in London. Newham’s unemployment rate stands at 8.7%, the highest of any local authority area nationally. Within that, the East Ham parliamentary constituency records an alarming 17.8% unemployment rate, the worst in the country, exposing deep‑rooted vulnerabilities in some of the capital’s most deprived communities.
Retail and hospitality under pressure
ONS payroll data suggests much of the damage is concentrated in customer‑facing sectors that traditionally provide entry‑level roles and flexible work. Nationally, there were 184,000 fewer payrolled employees at the end of 2025 than at the start, a 0.6% decline, with retail losing about 72,000 jobs and hospitality almost 70,000 over the year.
Health and social services bucked the trend, adding 37,000 jobs, followed by public administration with 16,000 extra roles, but this expansion was not enough to offset losses elsewhere. Liz McKeown, director of economic statistics at the ONS, said reductions have been “concentrated in retail and hospitality” and reflect “ongoing weak hiring activity,” with vacancies broadly flat over the past six months after a long decline.
While London is the clear outlier on unemployment, the national data also points to a cooling jobs market. Across the UK, the unemployment rate held at 5.1% in the three months to November, but the more volatile single‑month measure ticked up from 5.0% to 5.3%, its highest level since December 2020.
The total number of payrolled employees fell by 184,000 over the year to December to 30.2 million, and slid by 43,000 on the month, a 0.1% decline.
Wage growth in the private sector has slowed to its lowest rate in five years, with regular average earnings (excluding bonuses) rising at an annual rate of 4.5% in the three months to November, down from 4.6% a month earlier, while public sector wage growth remains elevated due to earlier‑than‑usual pay awards.
Taken together, the figures suggest London is now at the epicentre of a national jobs slowdown, with younger workers, retail and hospitality staff, and residents in already disadvantaged boroughs bearing the brunt of a rapidly worsening employment landscape.