London's unemployment rate has fallen but remains the highest in Britain, prompting business leaders to urge Andy Burnham's government not to ignore the capital in its plans to boost economic growth.
Official figures show the capital's unemployment rate stood at 6.5% in the three months to June, down by 0.8 percentage points since the first three months of the year.
Youth unemployment at 19.6%
For young Londoners aged 16 to 24, unemployment was at 19.6% in the rolling year April 2025 to March 2026, the highest for 11 years outside the Covid pandemic, according to data from the Office for National Statistics.
The overall jobless level in the capital was significantly higher than any other region, with the West Midlands on 5.6%, Yorkshire and the Humber 5.5%, North East 5.4%, East Midlands 5.1%, North West 5%, South East 4.1% and the Eastern region 3.5%.
The different levels of unemployment across the UK highlight that while London has huge wealth, it also has many deprived communities with hundreds of thousands of people struggling in the ongoing cost-of-living crisis.
Business leaders warn of 'hugely challenging jobs market'
Karim Fatehi, chief executive of the London Chamber of Commerce and Industry, told The Standard: "The latest labour market figures are a timely reminder not to take London's economy for granted.
"The capital is a hotbed of innovation and growth, but with the highest unemployment rate in the country, London's status as the UK's economic engine is now under serious threat.
"Rising tax burdens and legislative requirements have stifled hiring in the capital, harming business confidence and discouraging firms from investing in the next generation of young talent."
Matthew Fell, competitiveness director at BusinessLDN, stressed: "Londoners are facing a hugely challenging jobs market, with the capital's young people being hit especially hard by difficult hiring conditions.
"The Prime Minister has rightly announced plans to give the Mayor and other local leaders more powers to drive growth. Better joining up training and employment support so that fewer people fall through the cracks will be crucial.
"The Government must also look at bringing down the cost of doing business which is holding firms back from hiring."
Vacancies and wage growth fall
Vacancies in the UK jobs market have fallen back again, while wage growth in the private sector has hit a near six-year low, the ONS figures showed. There were around 6,000 fewer vacancies between May and July compared with February to April, bringing the level down to 707,000, the lowest in more than five years or, outside the Covid pandemic years, since 2014.
The latest ONS survey found that small firms may not be recruiting because of increased labour costs and other business expenses. The data also revealed that regular average wage growth in the UK's private sector fell to 2.8% in the three months to June, the lowest level since the three months to October 2020.
This is despite overall regular wage growth rising to 3.5% in the same period, from 3.4% in the three months to April, driven by a 6.1% increase across the public sector as a result of NHS pay awards. The UK's overall unemployment rate was 4.9% in the three months to June, while the number of workers on payrolls fell by 13,000 between May and June.
Work and Pensions Secretary Pat McFadden said: "We've already put in place reforms to get Britain working again. We've rebalanced Universal Credit to remove barriers that held people back from employment, and we're investing £3.5 billion in tailored employment support to help people with health conditions and disabilities move into work. We're also supporting businesses to hire young people through our Youth Jobs Grant."
Shadow business secretary Andrew Griffith said: "These figures show a jobs market that's ground to a halt. Businesses are still absorbing the cost of Labour's disastrous Employment Rights Act and tax rises and the worst is still to come."
