The UK labour market weakened again with the jobless rate at its highest since 2015, excluding the pandemic period, with wage growth slowing again, according to data likely to add to bets on a Bank of England interest rate cut as soon as next month.
The UK unemployment rate rose to 5.2% in the fourth quarter of 2025, the highest since the three months to October 2015 although it hit 5.3% in late 2020.
The jobless rate is calculated from a survey that the ONS is in the process of overhauling after response rates dipped too low during the pandemic. However, analysts say the quality of the data has improved in recent months.
The data also showed weaker inflationary heat coming from growth in workers' earnings.
Annual wage growth, excluding bonuses, slowed to 4.2% in the last three months of 2025 compared with the same period a year earlier, the Office for National Statistics said.
Economists polled by Reuters had mostly expected growth in regular average weekly earnings of 4.2%, down from 4.4% in the three months to November.
The Bank of England is watching pay as a gauge of how long Britain's above-target inflation is likely to last.
Earlier this month the central bank said wage growth in the private sector was starting to reflect the weakening of the jobs market after an unexpectedly strong run.
Private sector annual wage growth excluding bonuses - a measure of inflation heat closely watched by the Bank of England - slowed to 3.4% in the three months to December, down from 3.6% in the three months to November.
Investors yesterday were almost fully pricing in two quarter-point interest rate cuts by the end of this year as worries about inflation gave way to concerns about the jobs market and the broader economy.
Last week ONS data showed weaker-than-expected growth in gross domestic product in the October-to-December period, hurt in part by speculation about tax increases in finance minister Rachel Reeves' budget at the end of November.
