Unemployment is on the rise, the risk of cyber threats increases and inflation drops to 3%
Wage growth slows causing an increase in unemployment, SMEs are encouraged to adopt cyber essentials as cyber threats rise, and inflation drops to 3%.
UK Unemployment Rises as Wage Growth Slows
The UK’s unemployment rate has risen again, according to the latest data from the Office for National Statistics (ONS). In the three months to December 2025, unemployment increased to 5.2%, up from 5.1% in the three months to November. This marks the highest rate in almost five years.
Alongside the rise in unemployment, annual wage growth has slowed to 4.2%, its weakest pace in close to four years.
This combination of slower wage growth and rising unemployment suggests a cooling labour market.
Businesses Reacting to Higher Costs
Part of the slowdown may be linked to increased employment costs. The 2024 Budget raised employer national insurance contributions and increased the minimum wage.
Some businesses appear to have chosen to delay recruitment or leave vacancies unfilled as they review budgets for the year ahead.
Younger Workers Bearing the Brunt
The unemployment rate for 16–24-year-olds has risen to 16.1%. For school leavers and graduates, securing an entry-level role has become increasingly competitive.
Analysts have also raised concerns that investment in artificial intelligence could reduce the number of traditional starter roles over time, adding further pressure to new entrants to the job market.
Interest rates
The slowdown in wage growth may influence the Bank of England’s next decision on interest rates and could give room for a further rate cut.
Looking ahead
For your business, a softer labour market might make it easier for you to fill certain vacancies, with more applicants available for job openings. However, it could also hint at weaker consumer confidence that may lead to slower sales. If you are planning investment, recruitment or borrowing in the coming months, this may be a useful moment to revisit those plans rather than rush decisions.
See: https://www.bbc.co.uk/news/articles/c1l7pedyzjeo
Campaign Urges SMEs to Adopt Cyber Essentials as Cyber Threats Rise
A new campaign has been launched to encourage small and medium-sized businesses to take some simple, practical steps to protect themselves from the most common cyber-attacks. The main drift is that basic cyber hygiene still prevents the majority of incidents.
According to the Cyber Security Breaches Survey 2025, 43% of businesses and 30% of charities reported having experienced some kind of cyber security breach or attack in the last 12 months. Across the UK economy, cyber threats are estimated to cost £14.71 billion each year. For many businesses, a single major attack could be enough to put trading at risk.
Cyber Essentials
The campaign centres on Cyber Essentials, which was developed by the National Cyber Security Centre (NCSC) and the Department for Science, Innovation and Technology. It focuses on five key protections that most businesses can implement without needing to have specialist IT expertise. These are:
- Firewalls
- Secure configuration
- Software updates
- User access control
- Malware protection
These five areas address the weaknesses most commonly exploited by cyber criminals. Basic oversights, such as out-of-date software or a lack of control over who has access to IT systems, continue to be the root causes of many incidents.
Getting Started
To help businesses get started, some free resources are being promoted as part of the campaign, including:
- Cyber Essentials Readiness Tool – an online self-assessment to identify gaps
- Free 30-minute consultations with an NCSC-assured advisor for SMEs preparing for certification
While it can be tempting to think you are too small to be a target, most cyber-attacks are automated and opportunistic and look for weaknesses in systems regardless of the size of the business. This campaign is a timely reminder that basic measures can significantly reduce the likelihood of disruption, protect cash flow and help safeguard customer trust.
Inflation Drops to 3%
According to the latest figures released by the Office for National Statistics, UK inflation eased to 3% in January, down from 3.4% in December. Lower food, fuel and airfare prices appear to have been the biggest contributors to the reduction.
It’s important to remember this doesn’t mean prices are falling; they are just rising more slowly. Businesses still dealing with higher wages, energy and supplier costs will know that firsthand.
The combination of softer inflation and a slowdown in wage growth has increased expectations that the Bank of England will cut interest rates again when its Monetary Policy Committee (MPC) meets in March.
The latest inflation figure may suggest some better news for businesses over the coming months. Perhaps an easing of costs generally, or some relief from interest costs, particularly if your business has an overdraft or variable-rate loans.
See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest