Unemployment hits 5.2% – its highest level in nearly five years

Unemployment in the UK has risen to 5.2%, the highest level in nearly five years, while wage growth is continuing to slow – raising the prospect of another cut to interest rates in the spring.

The Office for National Statistics (ONS) said the rate of unemployment was 5.2% in the three months to the end of December, the highest rate since the quarter to January 2021. This was up from 5.1% in the three months to November.

The Guardian reported:

“Economists said younger workers were bearing the brunt of this slowdown in recruitment. Unemployment for 18- to 24-year-olds was 14% in the three months to December, the highest rate in five years – or nearly 11 years excluding the pandemic – amid concerns that Britain is slipping down global league table for youth employment.”

The figures suggest the Bank of England is likely to make another cut to interest rates by the Spring, as inflationary pressures appear to be easing.

The Bank has forecast that the unemployment rate will rise to 5.3% this year and that wage growth will moderate from 3.4% last year to 3.25% by the end of the year as inflation falls. At the its recent meeting earlier this month, the Bank kept rates on hold at 3.75%.

The Work and Pensions Secretary, Pat McFadden said:

We know there is more to do to get people into jobs. Our £1.5bn drive to tackle youth unemployment is a key priority and this month we announced that we’ll make it easier for young people to find and secure an apprenticeship, which comes on top of our investment to create 50,000 new apprenticeships.

The Work Foundation at Lancaster University responded to the labour market figures for February 2026 released by the Office for National Statistics. Ben Harrison, Director of the Work Foundation at Lancaster University commented:

Today’s figures show a weakening and uneven labour market, with more people looking for work and with young people particularly impacted.

Unemployment has climbed to 5.2%, its highest level in nearly five years. The number of people out of work has risen by 331,000 over the past year to 1.88 million — with data suggesting the UK has the fastest annual increase in unemployment in the G7.

While overall employment appears broadly stable and the rise in redundancies has slowed, the pain is not evenly spread. Young people, disabled people and men are bearing the brunt of the rise.

Youth unemployment is now at 14.0%, the highest rate for five years. This is particularly concerning as the number of 18-24 year olds out of work has jumped by 80,000 on the year to 575,000. More young people are actively seeking work, but too many are struggling to secure it.

Vacancies remain subdued at 726,000, despite a slight uptick on the quarter. The Government clearly recognises the need to provide more support to help people back into work but many initiatives – such as jobs on wheels and youth guarantees – remain in pilot phases.

To Get Britain Working, Ministers must prioritise a twin focus on rapidly expanding tailored employment support and ensuring those returning to work are able to access secure, and well-paid jobs across the country.