The ONS has released employment and wage data covering the year to March-May: UK Labour Market July 2025 - Office for National Statistics
Sarah Coles, head of personal finance, Hargreaves Lansdown: “The Bank of England was hoping for bad news from the labour market, and it got what it wanted: wage growth has slowed and unemployment has risen again. For the Bank, this is a sign of growing slack in the labour market, which is likely to ease inflationary pressures, and mean it can cut rates sooner rather than later. For anyone with a remortgage looming, this should help take the pressure off. For anyone affected by job losses it’s an altogether different picture. These aren’t just numbers, they are real people thrown into financial disarray.
On the plus side, those who are in work are still seeing their wages rise ahead of inflation. The most recent HL Savings & Resilience Barometer shows that employees have an average of £262 left at the end of the month and are saving 7% of their income, both of which demonstrate real short-term resilience among those who are in secure jobs. However, we can’t rely on this robust growth forever. Wage rises are slowing, and this is likely to continue through the rest of the year as employers try to counteract the impact of higher employers’ National Insurance by offering smaller pay increases.
Looking for work
Meanwhile, the number of people looking for work is on the rise. Unemployment has been trending up for three years and is now higher than before the pandemic. Vacancies have also fallen for a notable 36th month running. The ONS says that companies are cutting numbers by not replacing staff after they leave. As a result, the number of unemployed people per vacancy rose to 2.3% - up from 2% last month. It means that finding a job is proving a Herculean task.
Losing work has a horrible impact on your financial resilience across the board. The HL Savings & Resilience Barometer shows that people who are out of work run into real financial difficulties. On average, only 26% have enough emergency savings, while less than 1% have enough money left at the end of the month to be resilient.
If you lose work, it’s vital to take stock as soon as possible. The key will be to cut any costs you can while you’re looking for work. If you’re worried about missing bills or debt repayments, talk to the companies involved sooner rather than later. It’s much better to make a plan with them, rather than simply falling behind.
You’ll be in a much better position if you have thought about all of this when the going is good, so everyone should take the time to revisit what would happen if they were unable to work for a period. It’s why advisers will recommend having an emergency savings safety net big enough to cover 3-6 months’ worth of essential spending – in a competitive easy access savings account - so you’re in better shape to deal with whatever is on the horizon.”
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