Unemployment in the UK rose to its highest rate in nearly five years at the end of 2025, climbing to 5.2% in the three months to December, up from 5.1% in the three months to November, according to the Office for National Statistics (ONS).
It came as annual wage growth slowed, dropping to its lowest level in almost four years.
But young people are bearing the brunt, with unemployment for those aged between 16 and 24 rising to its highest in more than 10 years at 16.1%. 
Patrick Milnes, Head of People and Work Policy at the British Chambers of Commerce, said: “There are strong signs that the labour market is continuing to loosen as wage growth including bonuses has eased to 4.2% and the rate of unemployment has risen to 5.2%.
“Wage growth is being propped up by the public sector and the number of unemployed people per vacancy now sits at 2.6, the highest in more than 10 years if the pandemic period is excluded.
“Last year, businesses were hit hard by the increase in National Insurance contributions, and many are now facing further rises in the National Living Wage alongside higher business rates. Our research shows that labour costs remain the biggest cost pressure for businesses, cited by 72% of businesses.
“Against this background it is unsurprising they are holding off hiring. Especially as the imminent introduction of new Employment Rights legislation adds additional complexity to the picture.
“While the Spring Statement will provide a fuller update on the economic outlook, businesses are clear they want to see concrete action to reduce costs, boost exports and encourage investment.”
More detail on the labour market data can be found here.
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