UK low-gear labour market: young people 40% of jobless, says Lombardelli

Clare Lombardelli, the Bank of England's Deputy Governor for Monetary Policy, said on Tuesday, 10 November 2026, that the UK's job market has slipped into a "low-gear" state in which employers are hiring less rather than firing more, and that this hurts people trying to enter work for the first time. She set out the argument in a speech titled "The low-gear labour market" at the Bank of England Watchers' Conference. In an interview published the same day, she said young people now make up around 40% of all unemployment in the UK, a share that has risen sharply since 2021, and that hiring has fallen most in hospitality and retail, two common first jobs for young workers.

When a job market weakens through layoffs, the people hit are those already in work. When it weakens through a hiring freeze, as the Deputy Governor describes, the people hit are those outside trying to get in: school leavers, graduates and anyone seeking a first job. Employers keep their existing staff but create fewer openings. That is why a fall in hiring shows up first in youth unemployment, even if overall job losses stay low.

The sectors she named make the point sharper. Hospitality and retail are where many young people take their first paid work, whether alongside study or after school. If those doors close, young workers lose not only income but the early experience that later employers ask for. The speech also points to a cost question: minimum wage rates for younger workers have risen faster than the adult rate, and nearly three in ten employers affected by the National Living Wage told the Bank's survey that they would employ fewer people overall.

The Deputy Governor's broader concern is that the job market has become less effective at moving people towards new opportunities, and that the challenge is to help it shift up a gear. On artificial intelligence, the speech says business leaders expect about half of AI's productivity gain to come through employing fewer people. For students and first-jobbers anywhere, including Indian graduates who hope to work in the UK, the message is that entry-level hiring there is tight.

What a young job seeker can do next: build experience that does not depend on a single entry-level route, such as internships, apprenticeships, part-time work and short skills courses, and watch the Bank of England's next decisions and the UK's official labour market data for signs that hiring is picking up.

Peepals timeline: On Tuesday, 10 November 2026, an interview with the Deputy Governor was published setting out her view that young people were being hit hardest, and she gave her speech, "The low-gear labour market", at the Bank of England Watchers' Conference the same day. In the same remarks, she said she would not rule out an interest rate rise at the Bank's December meeting. Our timeline from the dates in the reports.

Short-term: Young people in the UK seeking first jobs, especially in hospitality and retail, face fewer openings.

Long-term: A long period of low hiring can leave a group of young people with gaps in work experience early in their careers, which the speech identifies as a cost of a low-hire, low-fire market.

Who is affected: School leavers, graduates and young job seekers in the UK; international students and graduates planning to work there; and employers in hospitality and retail.

What to watch next: The Bank of England's December interest rate decision, which the Deputy Governor said she would not rule out being a rise.

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