U.K. Unemployment Rises, Yields Plummet Ahead of Critical Budget

As of November 11th, 2025, the U.K. is facing a weakening labor market, with the country's unemployment rate rising to a higher-than-expected 5% in the three months leading up to September. During this period, the estimated number of payrolled employees in the U.K. fell by 32,000 between August and September.

This economic data has led to volatility in U.K. assets, as investors weigh the potential impact on the country's economy ahead of a critical budget and the final interest rate decision of the year. In response, yields on U.K. government bonds, known as gilts, have fallen notably across the curve. The yield on the benchmark 10-year gilt is over 5 basis points lower at 4.405%, as bets on an end-of-year rate cut from the Bank of England have risen.

The combination of rising unemployment and falling bond yields reflects the uncertainty surrounding the U.K.'s economic outlook, with investors closely monitoring the situation as the country prepares for a crucial budget and the central bank's final policy decision of 2025.