Forecast of United Kingdom Youth Unemployment Rate Using ARIMA Model

The economic structural transformation driven by the development of science and technology has led to a reduction in traditional job positions, while emerging industries' skill demands mismatch youths' capabilities. Lagging educational systems struggle to promptly cultivate digitally skilled talents aligned with industrial shifts. This results in a significantly higher unemployment rate among youths (aged 16-24) than the societal average, a global challenge particularly acute in developing economies. Youth unemployment threatens social stability and economic vitality, and predicting its trends could guide policy adjustments and educational reforms to prevent the misallocation of resource and avoid long-term unemployment risks. This study forecasts the United Kingdom youth unemployment rate (ages 1624) using an ARIMA(1,1,2) model optimized with historical data ranging from November 2004 to November 2024. Results show significant accuracy improvements (R=0.8905), predicting a decline from 5.2% in 2025 to 4.6% in 2029 under stable economic conditions. Although residual diagnostics confirm model validity, limitations still exist, including linearity assumptions and exclusion of external variables. Future research should integrate hybrid methods and consider diverse scenarios to address nonlinear shocks and structural economic shifts, supporting sustainable employment strategies for government.