UK unemployment rate hits five-year high of 5.2%

Unemployment in the UK rose to a near five-year high in the last three months of 2025, official figures show.

The unemployment rate climbed to 5.2% in the quarter, the Office for National Statistics (ONS) said, up from 5.1% in the three months to November.

It came as the rate of annual wage growth also fell, dropping to its lowest level in almost four years.

The UK's economic growth has dampened, with a backdrop of slower hiring as businesses cut back due to higher costs.

Chancellor Rachel Reeves' 2024 Budget hiked employer National Insurance contributions and saw a rise in the minimum wage, leading some businesses to slow down hiring and replacing outgoing workers.

The Conservatives said Labour had overseen "an unprecedented series of monthly unemployment increases" which were the "predictable result of 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 Office for National Statistics (ONS) said the figures reflected "weak hiring activity", but also that more people who are out of work are now looking 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 further fall 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 uses its key interest rate as a tool to cool inflation, the rate at which prices rise, which is currently above its 2% target.

"What's clear is the economy is weak, employment is weak, and it looks like wages are weak," said Jo Thorne from Wealth Club.