UK unemployment set to surge by 400,000 under Labour, report warns

A new report warns that UK unemployment could rise by 400,000 under a Labour government, with young people disproportionately affected by job losses. The analysis, published on June 2, 2026, cites planned tax increases by shadow chancellor Rachel Reeves as the primary driver that would discourage hiring and cool the labour market. The report projects that youth unemployment will climb sharply as businesses face higher payroll taxes and reduced investment incentives. It describes the proposed fiscal measures as a “tax raid” that would stifle job creation, particularly in entry-level positions. The overall unemployment rate is forecast to increase by 1.2 percentage points from current levels if the policies are enacted. Labour's economic platform includes raising corporate taxes and reversing recent cuts to national insurance, moves the report claims would weigh on employer confidence. Critics argue the party's approach risks derailing a still-delicate recovery, while Labour maintains that targeted public spending will offset any short-term employment drag.