North West NEETs could add between £1bn and £3bn to the economy, according to PwC UK analysis

• North West has the second highest population of young people classed as NEETs (those not in education, employment or training) in the UK 

• NEET rate in the region is 14%, significantly higher than the national benchmark 

• Reducing NEET numbers in the North West has the potential to add £1 billion to £3 billion to the UK’s annual GDP  

• Overall, UK GDP could be boosted by around £13 billion to £26 billion if regional disparities in the share of young people classed as NEET were reduced to align with the best performing region, Northern Ireland.

North West NEETs (those not in education, employment or training) could potentially add £1 billion to £3 billion to the UK GDP if they were to join the labour force, according to analysis from PwC UK into the annual youth employment rate (16–24-year-olds).  

PwC’s Youth Employment Index (1) tracks the progress of youth employment outcomes across the 38 OECD (Organisation for Economic Co-operation and Development) countries and regions in the UK, looking at metrics including labour market participation, quality of work and skills acquisition. Analysis shows that in the North West, almost 124,000 people are classified as NEET, just over 14% of 16–24-year-olds. The region has one of the highest NEET levels in the UK, but also one of the largest potential gains.     

Northern Ireland is now the benchmark for reducing the share of young people who are NEET, with 9% of 16-to-24- year-olds classed as NEET, whereas Scotland is at the other end of the scale with 16%. PwC analysis indicates that reducing regional disparities and getting more young people into employment under initiatives such as the government’s Youth Guarantee could boost GDP by around £13 billion to £26 billion if this gap to Northern Ireland was reduced.   

UK youth jobs market   

The UK’s youth jobs market performance has declined over the past year, dropping four places to 27th out of the 38 OECD economies, according to PwC's analysis (2). The report finds that the three main drivers to the UK’s deteriorating performance are:     

• Cyclical pressures: The overall UK labour market has cooled. UK youth unemployment is now almost three percentage points higher than the OECD average, suggesting young workers are disproportionately impacted by the softening jobs market relative to older workers. While adult workers have seen consistent employment growth since 2012, employment among young workers in 2025 remain below 2019 levels. The youth-to-adult unemployment ratio is now at its highest level on record and the highest in the OECD.

• Graduate employment lull: The overall share of recent graduates in ‘graduate jobs’ has fallen to its lowest level since 2014, indicating the labour market’s capacity to absorb new entrants is weakening. The number of graduates entering the jobs market continues to climb with 2024 marking the first year over one million students graduated from university.

• Rising economic inactivity: A growing share of young people are becoming economically inactive, driven by a larger pool of students and an increase in long-term sickness. Three-times as many young people are inactive due to long-term sickness than 2005, with one quarter (26%) of young people reporting common mental health conditions in 2024, compared to 19% in 2014.

Little indication of AI impacting youth employment 

PwC’s Hope and Fears survey found nearly a third of entry-level workers say they’re worried about AI’s impact on their future. Across all sectors, the Index found no direct impact of AI on youth employment, with weaker business sentiment and softer labour demand being the main drivers for higher youth unemployment. 

However, analysing highly exposed sectors shows a potential impact emerging. The IT sector is the most exposed to AI adoption and typically has higher occupational churn, so could be an early indicator for wider trends. Youth employment in IT fell by one-fifth (20%) last year, in part due to a 14% fall in roles for new graduates, while adult employment has remained broadly stable. This could suggest that increased AI adoption has had some impact on entry-level roles at least in the short term. This trend, however, does not currently extend to other sectors. 

Longer term, young people are optimistic about AI impact. PwC’s Hope and Fears survey found Gen Z workers feel more excited about how AI will affect their careers over the next three years compared to Gen X - expecting to see an increase across productivity (67% vs 39%), salary (47% vs 18%), and job security (48% vs 16%).

How can the trend be reversed?

The Government has recently outlined a multi-faceted approach to tackling youth economic inactivity, including the Youth Guarantee, which ensures paid work placements for eligible out of work 18-to-21-year-olds, and free apprenticeship training for under-25s working at SMEs. An independent investigation into rising youth economic inactivity will also conclude in Spring 2026.

PwC has analysed the impact measures could have if successful. Using Northern Ireland, the best performing region for reducing young people inactivity with only 9% of 16-to-24-years olds classed as NEET, as the benchmark, analysis showed substantial economic benefits. If regional disparities were reduced and worst performing regions such as London (15% NEET rate) and Scotland (16% NEET rate) progressed NEET levels towards Northern Ireland, it would boost GDP by around £13 billion, and up to £26 billion if the gap was fully closed.

Jake Finney, Senior Economist at PwC UK, said:

“The UK’s youth jobs market has deteriorated sharply. This is having large economic ramifications, as according to government estimates, lost output is costing businesses £85bn per year and £212bn per year in cost to the state, equivalent to 7% of GDP. It’s positive the Government has signalled a clear focus on tackling this challenge as without action, it is possible the situation could get worse rather than better: our survey of 4,000 UK adults showed one-in-ten workers are actively considering leaving work and younger workers particularly at risk.

“It is too early to tell the impact of AI. Highly exposed sectors like IT may be a ‘canary in the coalmines’ moment but our analysis shows no wider impact approaching in other sectors, yet. Young people disproportionately have jobs in low-AI risk sectors such as retail and hospitality, which will provide some shelter. With increasingly numbers of young graduates entering a rapidly changing labour market due to AI adoption, the challenge and opportunity for businesses will be how they develop this generation of talent to meet the demands of an evolving workplace.”

-Ends-

Notes to Editors: 

1. The PwC UK Youth Employment Index began in 2006 and tracks the progress of youth employment outcomes across the 38 OECD countries using a combination of indicators to gain a holistic view of labour market performance for young people, including looking at labour market participation, quality of work and skills acquisition.

2. The report includes UK data up to the third quarter of 2025, however, the international Index rankings are based on 2024 data, due to the availability of annual data from the OECD.   

3. PwC UK has joined more than 60 major and many small employers to work with the government to tackle the rising tide of ill-health that is pushing people out of work and holding back growth. The joint effort, developed through the Keep Britain Working Review, will drive action to prevent ill-health, support people to stay in work, and help employers build healthier, more resilient workplaces. PwC will be one of the Vanguards, early adopters who will develop and refine workplace health approaches over the next three years. Employers join forces with government to tackle ill-health and keep Britain working - GOV.UK