The UK’s unemployment rate climbed to 5.2% in the final three months of 2025, its highest in almost five years, according to latest figures from the Office for National Statistics.
Across the UK, average annual pay grew by 4.2%, with the public sector seeing 7.2% growth and the private sector seeing 3.4%.
The ONS says the figures reflect “weak hiring activity”, reflecting the feedback in successive editions of our Quarterly Economic Surveys, which have shown that labour costs remain the biggest cost pressure for businesses, cited by 72% of respondents in the latest survey.
Paul Cherpeau, chief executive of Liverpool Chamber, said:
“There are clear signs that the labour market is continuing to cool, with wage growth easing to 4.2%, marginally above inflation, and the rate of unemployment rising to 5.2%.”
“Higher employer National Insurance contributions, increases to the National Minimum Wage and the introduction of the Employment Rights Act have all led some businesses to slow down their hiring activity, particularly for younger candidates, and withhold from replacing outgoing workers.
“This continued barrage of cost pressures harms confidence among business owners to move forward with growth and investment decisions, and many will now be looking towards the Chancellor’s Spring Statement for evidence of concrete action to reduce costs, boost trade and encourage investment.”
For further information about the latest ONS figures, visit here.
