UK Jobless Rate Hits Highest in Over a Decade Outside Pandemic

Britain’s labour market weakened further at the end of 2025, with the unemployment rate rising to 5.2 percent — the highest level seen outside the pandemic era in more than a decade, official figures showed on Tuesday. The data highlights slowing wage growth and adds to expectations that the Bank of England may cut interest rates in the coming months to support the economy.

According to the Office for National Statistics (ONS), the jobless rate climbed to 5.2 percent in the three months to December 2025, up from 5.1 percent in the previous quarter. That level is the highest since the period covering late 2015, excluding the exceptionally high unemployment seen during the COVID-19 pandemic.

The rise in unemployment has coincided with a cooling in wage growth, with regular earnings excluding bonuses expanding by 4.2 percent annually slower than in previous quarters and lower than many economists had expected. Private sector wage increases were particularly subdued, reinforcing signs of broad labour market softening.

Sterling weakened sharply following the data release, reflecting investor bets that the Bank of England is more likely to cut its key interest rate as the labour market loses momentum. Analysts cited by Reuters said that the combination of rising unemployment and decelerating wage pressures increases the likelihood of rate cuts at the Bank’s March policy meeting.

While overall employment showed some modest increases, the number of payrolled jobs declined slightly in recent months, and the number of jobseekers per available vacancy has risen suggesting that finding work has become harder for many.

Economists say the most recent trend reflects broader economic challenges including slower GDP growth, higher business costs and subdued investment. Some forecasters project that the UK’s jobless rate could rise even further through 2026, potentially reaching levels not seen in more than a decade outside of extraordinary economic disruption.

The latest labour market figures could also have political implications, adding pressure on policymakers and putting focus on government strategies to stimulate job creation and support growth amid evolving economic conditions.