Overview
- NIESR estimates the real marginal cost of taking on entry‑level staff rose about 7% between April 2024 and April 2025, driven by higher employers’ National Insurance and increases in the national living wage.
- Firms have slowed recruitment rather than cutting roles, a shift NIESR says is squeezing graduates and 18–24s and is most pronounced in sectors with heavy minimum wage exposure such as hospitality and retail.
- The institute reports rising unemployment in IT and says this may reflect artificial intelligence reducing demand for entry‑level roles, while noting overall vacancies have fallen from recent peaks.
- NIESR forecasts unemployment averaging around 5.4% this year, the highest since 2015, alongside modest GDP growth of roughly 1.4% and two Bank of England rate cuts taking Bank Rate to 3.25%.
- Scenario analysis warns that a drop in net migration toward zero could leave GDP about 3.6% smaller by 2040 and widen the budget gap by roughly £37bn, with public debt trending toward 100% of GDP limiting fiscal room.