UK Unemployment Now Higher Than Italy's
In a sign of potential weakness in its economic recovery, UK unemployment now exceeds that of Italy's, according to the Financial Times. The data point raises questions about the relative health and recovery trajectory of major European labor markets.
A historic shift in European labor markets sees the UK's unemployment rate of 5.2% for the three months to December 2025 surpassing Italy's, which fell to a record low of 5.1% in January 2026. This is the first time the UK's jobless rate has been higher than Italy's since the 2009 financial crisis. The UK's figure represents a nearly five-year high, with total unemployment rising by 94,000 from the previous quarter to 1.883 million. Projections from the Office for Budget Responsibility suggest this trend may continue, forecasting a peak of around 5.3% in 2026 due to subdued hiring demand. In contrast, Italy's unemployment rate is the lowest since its current data series began in 2004, with the economy adding 80,000 jobs in January. This improvement is part of a long-term trend of job creation that has persisted despite sluggish GDP growth. Italy's overall employment rate has climbed to 62.6%. Economists point to several factors driving the UK's rising unemployment, including increases in the national minimum wage for younger workers and higher employer National Insurance contributions. A survey by the Chartered Institute of Personnel and Development found that over a third of employers are cutting hiring due to new workers' rights legislation. Youth unemployment presents a particularly stark contrast. In the UK, the unemployment rate for 16-24 year-olds reached 14% in the last quarter of 2025, its highest level in over a decade. Meanwhile, Italy's youth unemployment rate for job-seekers aged 15-24 fell significantly in January to 18.9% from 20.9% the previous month. The UK's economic inactivity rate—people not in work and not looking for a job—stood at 20.8% in the three months to December 2025. In Italy, while the employment rate has been rising, the number of inactive people also saw a slight increase in January. This labor market divergence occurs as Italy's GDP per person, a measure of living standards, surpassed the UK's in August of the previous year. Italy's economic progress has been linked to a permanent rise in its employment rate and an increase in female participation in the workforce.
