Growth numbers look good. But four years of falling job vacancies tell a different story.

The UK is the fastest growing economy in the G7, inflation has fallen to 2.8%, and net migration is at its lowest level since 2021. That is the picture the Prime Minister painted on 23 May, when Keir Starmer set out what the government has described as a comprehensive record of progress in delivering on its economic promises.

There are genuine headline wins in there. GDP growth beat expectations at 0.6% in the first quarter of 2026. NHS waiting lists have fallen to their lowest point in three and a half years. A landmark trade deal with the Gulf Cooperation Council was concluded on 20 May, making the UK the first G7 nation to agree such a deal with the six country bloc.

But running alongside those numbers is a different set of statistics, drawn from the same official sources, which paints a more complicated picture of the labour market and the people who depend on it.

The vacancy picture

The Office for National Statistics publishes monthly vacancy estimates drawn from its Vacancy Survey. The most recent figures, covering February to April 2026, put total estimated vacancies at 705,000. That is down 54,000, or 7.1%, compared with the same period a year ago. It is the lowest reading since February to April 2021 and outside the pandemic period, the lowest since September to November 2014.

The decline is not a blip. Vacancies peaked at around 1.3 million in the three months to May 2022, as the economy reopened after Covid restrictions and employers competed intensely for workers. Since then, the number has fallen almost every quarter. The January to March 2026 figures, published a month earlier, recorded 711,000 vacancies already 8.3% lower than the same period in 2025 and 9.9% below pre pandemic levels in early 2020.

The contraction has spread across sectors. The latest ONS bulletin notes vacancies fell in 13 of the 18 industry categories tracked. Construction has seen some of the steepest drops, down 40.4% year on year in the December 2025 to February 2026 period. Retail and hospitality, sectors that have historically provided entry level work and second jobs, have shed more than 150,000 roles in the year to April 2026, according to ONS payroll data.

What that means for unemployment and welfare

A tightening vacancy pool does not automatically translate into rising unemployment, but when hiring slows across broad sections of the economy, the effects accumulate. The ONS employment bulletin for April 2026 records unemployment at 4.9% for December 2025 to February 2026, up 0.5 percentage points on the year. That equates to approximately 1.78 million people out of work.

Long term unemployment those out of work for more than twelve months has reached 474,000, the highest level since January 2016. The unemployment rate for 16 to 24 year olds now stands at 16.2%, the highest since January 2015. The Office for Budget Responsibility, in its March 2026 outlook, forecast the unemployment rate to peak at 5.3% during 2026 before beginning a gradual decline.

The Claimant Count, which measures people receiving unemployment related benefits, stood at approximately 1.694 million in March 2026, according to the ONS. The OBR has separately flagged that incapacity and health related benefits caseloads have grown around 7% per year on average since the pandemic, and projects that growth will continue at a slower pace through to 2030.

The government's trade agenda and what it is meant to deliver

Trade policy is the government's primary lever for generating new economic activity and the business certainty it argues will, in time, underpin new hiring. Since taking office, ministers have concluded agreements with India, the United States, the European Union on agri-food standards, South Korea, and most recently the Gulf Cooperation Council.

The GCC deal, announced on 20 May 2026, removes an estimated £580 million in annual tariff duties on UK goods exports once fully implemented. Government modelling projects a long run GDP gain of £3.7 billion a year compared to a 2040 baseline with no deal, a bilateral trade increase of roughly 19.8%, and a £1.9 billion increase in real wages, equivalent to around £60 per worker per year in the long run. Those are modelled estimates, not near term forecasts, and they come with the caveat that the deal must still be formally ratified before any provisions take effect.

The UK-India deal, signed in July 2025 and currently completing parliamentary ratification, is modelled alongside the GCC agreement to project a combined GDP uplift of around £8.5 billion a year in the long run. The House of Commons Library, in a briefing published on 21 May 2026, summarises the state of all UK trade negotiations, noting that agreements with South Korea, Switzerland, Turkey, and Greenland are either concluded or in progress.

The government has also announced targeted domestic measures, including legislation to give small firms stronger protection against late payments and VAT cuts on hospitality, intended to ease pressure on the sectors where vacancy declines have been sharpest.

Reconciling the headline numbers

The tension between the government's economic headline figures and the labour market data is not straightforwardly a contradiction. GDP growth and employment can diverge, particularly when growth is led by higher margin sectors financial services, professional services, and technology rather than the mass employment industries of manufacturing, retail, and construction.

The Prime Minister's 23 May statement noted that 416,000 more people are in work compared with a year ago, a claim consistent with the ONS employment figures. But the Claimant Count and long term unemployment data indicate that a growing share of those not in work are spending longer out of it, and that the benefit system is absorbing more of that pressure over time.

The OBR's March 2026 fiscal outlook described current labour market weakness as driven "primarily by entrants into the labour force struggling to find work amid subdued hiring demand." That is a demand problem. Trade deals can help create demand, but their effects take years to work through supply chains, investment decisions, and hiring plans not months.

The GCC and India trade deals both require parliamentary ratification before any terms take effect. The ratification process involves scrutiny under the Constitutional Reform and Governance Act, and implementing legislation will be needed for some provisions. Until that process completes, the headline GDP and wage projections remain modelled scenarios, not outcomes.

For the labour market, the OBR forecasts unemployment peaking at 5.3% in 2026, then falling gradually to an estimated equilibrium rate of around 4.1% by 2030. That trajectory assumes subdued hiring demand eases as the economy closes what the OBR describes as a negative output gap, the difference between what the economy is producing and what it could produce at full capacity.

Whether the government's trade programme accelerates that recovery, and whether it creates the kind of roles that address the persistent vacancy shortage in construction, retail, and entry level services, will only become clear as the deals move from signing ceremonies to the factory floor and the shop front.