Britain's unemployment rate climbed to 5.2 percent in the final quarter of 2025, marking its highest level in nearly five years, according to official data released by the Office for National Statistics on Tuesday. The figures revealed that 1.883 million people across the United Kingdom are now out of work, an increase of roughly 331,000 compared to the same period a year earlier, while youth unemployment surged to 14 percent, intensifying concerns about a deepening jobs crisis.
The ONS said the rise reflected weak hiring activity across the economy, though it also noted that more people who had previously been economically inactive are now actively seeking employment. The employment rate for those aged 16 to 64 stood at 75.0 percent, down 0.1 percentage points from the previous quarter. Meanwhile, the economic inactivity rate fell slightly to 20.8 percent, suggesting that more individuals are re-entering the labour market even as job opportunities remain scarce.
Labour market analysts pointed to the impact of policy changes introduced in Chancellor Rachel Reeves' 2024 Autumn Budget as a key driver of the slowdown. The Budget raised employer National Insurance contributions and increased the minimum wage, measures that businesses have said led them to slow hiring and cut back on replacing departing workers. Job vacancies fell to 726,000 in the November 2025 to January 2026 period, dropping below pre-pandemic levels for the first time. Redundancies rose to 145,000, an increase of 31,000 compared to the previous year.
The data dealt a significant blow to Chancellor Reeves, who has repeatedly pledged to improve economic opportunity and rebuild the British economy. A government spokesperson stated that the administration remains focused on creating the conditions for growth and putting more money into working people's pockets. However, the opposition Conservative Party seized on the figures, arguing that Labour has overseen an unprecedented run of monthly increases in unemployment and calling the trend the predictable result of poor economic decisions.
The Bank of England has also entered the debate, taking the unusual step of publicly criticizing government policy on youth unemployment. With 14 percent of young people now jobless, economists have warned that a generation risks being left behind if urgent action is not taken. Wage growth has slowed alongside the hiring downturn, putting additional pressure on household budgets already strained by years of elevated living costs.
Looking ahead, economists have cautioned that unemployment could continue rising in the coming months as the full effects of the National Insurance increases take hold across the private sector. Business groups have called on the government to reconsider policies they say are discouraging investment and hiring. The next set of labour market data, covering the January to March 2026 period, will be closely watched for signs of whether the trend is stabilizing or accelerating further.
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