Unemployment rate hits five-year high of 5.2% as wage growth cools

Unemployment in the UK has risen to 5.2%, the highest level in nearly five years, while wage growth continues to slow, raising the prospect of another cut to interest rates in the spring.

- Tom Knowles

The Office for National Statistics (ONS) said the rate of unemployment was 5.2% in the three months to the end of December, the highest rate since the quarter to January 2021.

This was in line with what economists had been expecting and was up from 5.1% in the three months to November.

Joblessness in the UK has steadily risen since 2022, and businesses have complained that tax rises by Rachel Reeves in her last two budgets have exacerbated this, with increases in national insurance contributions (NICS) and the minimum wage causing particular issues.

Economists said younger workers were bearing the brunt of this slowdown in hiring. Unemployment for 18- to 24-year-olds was 14% in the three months to December, the highest rate in five years - or nearly 11 years excluding the pandemic - amid concerns that Britain is slipping down the global league table for youth employment.