Unemployment in the UK climbed to its highest level in almost five years in the final months of 2025, according to new official data.
The Office for National Statistics (ONS) reported that the unemployment rate increased to 5.2% in the three months to December, up from 5.1% in the previous quarter, which ended in November.
The figures also showed annual wage growth easing further, falling to its lowest point in nearly four years.
The rise comes as the UK economy continues to lose momentum, with businesses slowing recruitment amid rising costs and weaker growth.
Chancellor Rachel Reeves’ 2024 Budget increased employer National Insurance contributions and raised the minimum wage, prompting some firms to reduce hiring and leave vacant roles unfilled when staff exit.
The Conservatives blamed Labour for the latest unemployment increases, describing them as “an unprecedented series of monthly unemployment increases” caused by “bad decisions and economic incompetence”.
Shadow work and pensions secretary Helen Whately said: “Young people are taking the hardest hit. Entry-level roles are the first to disappear from Labour’s tax hikes. By making hiring more expensive and more risky, Labour are ensuring school leavers and graduates never even get a foot in the door.”
The ONS said the rise reflected “weak hiring activity”, alongside an increase in people who are currently out of work actively searching for jobs.
Economic statistics director Liz McKeown said: “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.”
Paul Dales, chief UK economist at Capital Economics, said the continued slowdown in wage growth “supports the idea that the Bank of England has at least a couple more interest rate cuts in its locker”.
The Bank of England uses interest rates to control inflation, which remains above its 2% target.
Jo Thorne of Wealth Club said: “What’s clear is the economy is weak, employment is weak, and it looks like wages are weak.”
(BBC News)