Britain’s unemployment rate surged to a five-year high of 5.2% in the final quarter of 2025, official figures from the Office for National Statistics (ONS) revealed Tuesday. The rise follows a 5.1% rate recorded in the three months to November, marking the highest UK jobless level since January 2021, during the Covid-19 pandemic.

“The number of workers on payroll fell further in the final quarter, reflecting weak hiring activity,” said Liz McKeown, ONS Director of Economic Statistics.

The data signals a sluggish UK labour market, raising concerns about the country’s economic recovery. Analysts note that slower hiring and stagnant payrolls may increase pressure on the Bank of England to consider cutting its benchmark interest rate next month, a move that already weighed on the pound.

Recent reports showed that the UK economy grew below expectations in Q4 2025, adding to concerns about growth prospects. Jonathan Raymond, investment manager at Quilter Cheviot, said: “Continuing the recent trend, the UK labour market is showing signs of creaking at a time when economic growth is difficult to come by.”

Wage growth also slowed, with average earnings rising just 4.2% in Q4, while UK inflation is expected to ease further in the coming months. The combined slowdown in jobs and wages underlines the challenges facing households and businesses alike, amid rising living costs and tighter financial conditions.

Economists and policymakers will be closely monitoring these trends as they consider monetary policy adjustments and strategies to stimulate growth, highlighting the growing pressures on the UK economy as it navigates post-pandemic recovery.