Unemployment rises to five-year high

Unemployment in the UK has risen to 5.2 per cent, its highest level for five years, according to official figures.

The Office for National Statistics said on 17 February that the unemployment rate rose from 5.1 per cent to 5.2 per cent in the three months to December.

Young people hit hardest

Young people have been particularly affected. Unemployment among 16 to 24-year-olds rose to 16.1 per cent.

A report last month by the Centre for Social Justice suggested that around 700,000 university graduates were out of work and claiming benefits.

Why is unemployment rising?

Businesses have blamed rising costs for a slowdown in hiring. The increase in employers' National Insurance contributions, which took effect last April, and rises in the national living wage have added to the cost of employing staff.

There are also concerns that businesses are using artificial intelligence for tasks previously done by entry-level staff, which may be making it harder for young people to find their first jobs.

The economy has been growing only slowly. Official figures last week showed it grew by just 0.1 per cent in the last three months of 2025.

Inflation falls

Separate figures are expected to show inflation falling. It stood at 3.4 per cent in December, above the Bank of England's target of 2 per cent.

The Bank held interest rates at 3.75 per cent earlier this month. Rising unemployment may strengthen the case for further cuts, as it suggests less pressure on wages and prices.

The government's response

The government has promised to help young people into work through training schemes and a guarantee of support for those out of work.

Opposition parties say the government's tax rises on employers have cost jobs.

What it means

Economists say the labour market has been cooling for some time, with fewer job vacancies and slower pay growth. They warn that unemployment could rise further this year if the economy does not pick up.

In the Midlands, manufacturers have reported difficulties, with the car industry under pressure from competition from China, the switch to electric vehicles and American tariffs.