UK jobless rate hits highest in a decade outside COVID
Data shows Britain’s unemployment rate reached its highest level in more than a decade outside the pandemic period in late 2025, with wage growth slowing further; This strengthens investors’ predictions that there will be a rate cut in the UK in March.
According to data from the Office for National Statistics, the unemployment rate increased to 5.2 percent in the last three months of 2025; this is the highest level since 2015, excluding the pandemic.
It reached 5.3 per cent in late 2020 and remained at 5.1 per cent in the three months to November.
KPMG UK chief economist Yael Selfin said, “Today’s data increases the likelihood that the Bank of England will continue to cut interest rates in March.”
Data from the ONS showed inflation weakening, driven by growth in workers’ earnings.
Annual wage growth, excluding bonuses, slowed to 4.2 percent in the last three months of 2025 compared to the same period in the previous year; That matched most economists’ forecasts in a Reuters poll, falling from 4.4 percent in the three months to November.
The BoE is monitoring wages as an indicator of how long Britain’s above-target inflation will last.
Earlier in February, the central bank said previously strong wage growth in the private sector was beginning to reflect a weakening in the job market.
Private sector annual wage growth, excluding bonuses, slowed from 3.6 percent in the three months to November to 3.4 percent in the three months to December.
ONS data last week showed weaker-than-expected growth in the overall economy in the October-December period; This has been partly influenced by speculation about tax rises coming into finance minister Rachel Reeves’ budget at the end of November.
There were some signs in the latest figures in Tuesday’s data release that the labor market may be stabilizing after being hit by Reeves’ tax increase paid by employers last April.
The number of people working on payroll decreased by 11,000 people in January compared to December.
In December, payrolls were revised down by 6000; This is the smallest decline since August last year and a much softer decline than the provisional estimate of a decline of 43,000.
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