Introduction: UK unemployment reaches highest level since early 2021
Good morning. Unemployment across the UK has reached a near five-year peak, accompanied by a slowdown in wage growth.
The latest labour market data, released this morning, indicates that the UK jobless rate increased to 5.2% in the October-December quarter.
This marks a rise from 5.1% in the September-November period and represents the highest unemployment rate since the first quarter of 2021.
The number of employees on company payrolls also declined, falling by 130,000 over the year and by 46,000 over the quarter.
This follows several months of concerns from businesses regarding Chancellor Rachel Reeves's policies, which have raised employment costs through increases in national insurance contributions and the minimum wage.
Earnings growth also decelerated during the quarter. Basic pay (excluding bonuses) increased by 4.2% in the October-December quarter, down from 4.4% a month prior.
Total earnings growth (including bonuses) similarly slowed to 4.2%, compared to 4.6% in the September-November 2025 period.
"The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month. Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.
The number of vacancies has remained broadly stable since the middle of last year. Alongside rising unemployment this means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high. Meanwhile, redundancies are also showing an upward trend.
Private sector wage growth continues to slow and is at its lowest rate in five years. Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish."
These remarks were made by Liz McKeown, Director of Economic Statistics at the Office for National Statistics (ONS).
The latest labour market figures have been published today. Commenting on the data, ONS Director of Economic Statistics Liz McKeown stated: (quote 1 of 3)
Read the latest Labour market overview ➡️ https://t.co/J9M6lAHkPM
The agenda
7am GMT: German inflation report
9.30am GMT: UK productivity data for Q4 2025
10am GMT: ZEW’s eurozone economic sentiment survey
1.30pm GMT: NY Empire State Manufacturing Index
