More than 400,000 additional people could be out of work by the end of Labour’s first term in government, according to new forecasts from the British Chambers of Commerce (BCC).
The business organisation has warned that unemployment is expected to rise over the next few years, with young people likely to face the biggest challenges finding work.
Its latest projections suggest the UK’s unemployment rate could reach 5.5 per cent by 2028, the highest level for more than a decade. If realised, that would take the total number of unemployed people to around two million.
The BCC believes higher labour costs and the increasing use of artificial intelligence are making it harder for employers to create and maintain entry-level roles, particularly for younger workers.
The organisation estimates there could be almost 167,000 more unemployed people aged between 16 and 24 by the end of 2028 than there were at the end of 2024. Youth unemployment is forecast to rise to 17.8 per cent.
David Bharier, Head of Research at the BCC, said the figures highlighted ongoing concerns about the strength of the economy and the prospects facing younger generations entering the workforce.
He warned that rising youth unemployment could have long-term consequences for economic growth and skills development.
Alongside its labour market forecasts, the BCC has cut its economic growth prediction for this year to 1 per cent. It also warned that inflation could remain stubborn, limiting the scope for further interest rate cuts.
The forecasts have prompted criticism from opposition politicians.
Andrew Griffith, the Shadow Business Secretary, said the figures pointed to a combination of weaker growth, higher inflation and rising unemployment.
He called on ministers to reconsider recent tax increases affecting businesses, arguing they were placing additional pressure on employers and households.
The report comes amid wider concerns about the economy. Former Labour Health Secretary Alan Milburn recently warned Britain risks creating a “lost generation” unless more support is provided to help young people into employment, education and training.
Economists have also expressed concerns about the outlook for the labour market. Deutsche Bank economist Sanjay Raja has predicted a further rise in unemployment later this year and warned that economic uncertainty could weigh on business investment.
Meanwhile, manufacturers have reported rising costs linked to higher energy prices and supply chain pressures.
Although factory output continued to grow during May, industry experts cautioned that the recovery remains fragile and could be affected by further increases in costs.
The Government has previously said its economic plans are designed to deliver long-term growth, boost investment and improve opportunities across the country.
However, the latest forecasts are likely to intensify debate over the direction of the UK economy and the impact of government policies on businesses and workers.
