Britain’s unemployment rate increased to 5.2 per cent in the three months to December, compared with 5.1 per cent in the period to November, according to the Office for National Statistics (ONS).The figures released on Tuesday will come as a blow to Chancellor Rachel Reeves, who has pledged to improve opportunity and rebuild the economy.The 5.2 per cent rate is the highest level of unemployment the UK has seen since January 2021, with the number of pay-rolled employees in the UK falling by 121,000 (0.4 per cent) last year.However, critics warn that the increase is the latest sign that the jobs market is continuing to deteriorate.Pay growth was particularly weak in the last quarter of 2025.UK regular pay growth slowed to 4.2 per cent in the three months to December, and rose by 0.8 per cent in real terms after accounting for CPI inflation.Reacting to the figures, ONS Director of Economic Statistics Liz McKeown said: “The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month. “Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.“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.“Private sector wage growth continues to slow and is at its lowest rate in five years. “Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish.”The release follows confirmation last week that a sharp rise in joblessness among young people had pushed the UK above the average youth unemployment rate in the European Union.It is the first time that has happened in a quarter of a century.This latest blow comes after months of complaints from businesses that the Chancellor has increased employment costs through rises in national insurance contributions and the minimum wage.It was recently revealed that 707,000 people with a university degree are out of work and claiming one or more benefits at the end of last year — a 46 per cent increase compared with pre‑lockdown levels in 2019.Shadow Business Secretary Andrew Griffith accused the Labour Government of “creating a jobless generation” through its policies. Mr Griffith said the latest figures reflected the impact of what he called a “zombie government” lacking a growth plan. He argued that Labour’s approach to taxation, economic policy and its Employment Rights Bill was discouraging firms from hiring. Mr Griffith said only the Conservatives would reduce regulation, cut taxes and strengthen the economy to “get Britain working again.”Unemployment among young people now sits at 14 per cent. Peter Dixon, senior economist at the National Institute of Economic and Social Research, argues that the headline figures conceal deeper structural pressures facing younger workers.“There are indications that younger workers in particular are being priced out of the market.“A rise of 33 per cent in the minimum wage over the past two years has pushed up the unemployment rate for 18‑24 year olds by more than two percentage points to 14 per cent,” he said. Mr Dixon warns that the trend is likely to continue, with another increase already scheduled.“With a further inflation‑plus rise in the minimum wage for 18‑20 year olds scheduled for April, young workers will continue to struggle to gain a foothold in the labour market in the near‑term.”The ONS also estimates that firms continued cutting staff in January.Its early, provisional figure for payrolled employees shows an 11,000 fall during the month, leaving payrolls 134,000 lower than a year earlier.MORE TO FOLLOW
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