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UK unemployment climbs to highest level since 2021
The United Kingdom's jobless rate reached 5.2% in the final quarter of 2025, marking the highest figure in nearly five years, according to official statistics released by the Office for National Statistics (ONS).
Youth unemployment surges to decade-high levels
Young workers aged 16 to 24 have been disproportionately affected, with unemployment in this group rising to 16.1%-the highest rate recorded in over a decade. Analysts attribute the trend to a slowdown in hiring, particularly in entry-level roles.
Lucy Gabb, a 2025 graduate from Cambridge University, told the BBC she has applied for more than 50 publishing jobs without success. "Most applications go unanswered, and when they do, it's usually a quick rejection," she said. "It's disheartening after years of study."
Wage growth slows but still outpaces inflation
While wages continued to rise faster than prices, annual pay growth decelerated to 4.2% in the three months to December, down from a revised 4.4% in the previous period. Economists suggest the cooling wage growth could prompt the Bank of England to consider interest rate cuts as early as March.
Inflation currently stands at 3.4%, remaining above the Bank's 2% target. Paul Dales, chief UK economist at Capital Economics, noted that the easing pay pressures "support the idea that the Bank has room for further rate reductions."
Sector shifts and policy debates
The retail and wholesale sector experienced the sharpest decline in payrolled workers, shedding 65,000 jobs since January 2025. In contrast, health and social care added 39,000 positions over the same period, reflecting a broader shift in employment patterns.
Danni Hewson, a financial analyst at AJ Bell, highlighted the gender dynamics at play, noting that many women transitioning from retail are moving into healthcare roles. However, she warned that advancements in artificial intelligence could further squeeze entry-level opportunities for young job seekers.
Political fallout over rising unemployment
Work and Pensions Secretary Pat McFadden acknowledged the challenges, stating that tackling youth unemployment remains a "key priority" for the government. He emphasized efforts to expand apprenticeship access for young people.
"There is more to do to get people into jobs," McFadden said.
The opposition Conservative Party blamed Labour's economic policies, with Shadow Work and Pensions Secretary Helen Whately accusing the government of "making hiring more expensive and more risky" through tax increases and minimum wage hikes.
The Liberal Democrats called for an emergency VAT cut for the hospitality sector, one of the hardest-hit industries.
Former Health Secretary Alan Milburn warned on BBC Radio 4 that young people risk being trapped in a cycle of "poor health, poor education, and graduating into the benefit system."
Data reliability concerns persist
The accuracy of the ONS's job market figures has faced repeated criticism, including from the Bank of England, which has questioned the robustness of the underlying data.
