The UK Unemployment Rate Rose To 5.2% In The Three Months To December 2025

The UK unemployment rate rose to 5.2% in the three months to December 2025, up from 5.1% in the previous quarter the highest jobless rate in nearly five years. This is the strongest increase since early 2021 (outside the pandemic years) and above what most economists had expected. Total unemployment climbed by roughly 94 000 quarter-on-quarter, reaching about 1.88 million people unemployed. Employment on company payrolls fell sharply over the year and quarter, indicating weaker hiring.
The number of job vacancies rose slightly, but not enough to offset rising joblessness leading to more unemployed people per vacancy. Economic inactivity edged down slightly, as more people returned to seeking work, yet labour market slack widened.
Wage growth cooled further: average regular pay (excluding bonuses) rose by 4.2%, down from earlier in the year.
Once inflation is taken into account, real wage growth was weak meaning incomes are barely keeping pace with prices.
Slower wage growth and higher unemployment have weighed on consumer confidence and household incomes.
The weak labour market and subdued wage pressures are fueling speculation that the Bank of England could cut interest rates at its March meeting to support growth.
Sterling fell in response to the data, reflecting markets’ expectations of easier monetary policy ahead.
Youth unemployment remains a notable concern, significantly higher than the overall rate, intensifying challenges for young workers Separate figures show slight increases in unemployment in Scotland, part of broader UK labour market softening.
Economists and analysts point to several factors behind the rising jobless rate: Business caution amid economic uncertainty and rising labour costs. Slowing economic growth, with GDP expanding only modestly late in 2025. Higher minimum wage and national insurance costs, which some firms cite as affecting hiring decisions.