UK unemployment hits five-year high as wage growth cools

""At the same time, firms are likely reassessing junior roles in the face of rapid advances in AI," he added."

"Paul Dales, chief UK economist at Capital Economics, said the data supported the view that policymakers have "at least a couple more interest rate cuts in their locker", with the probability of a March move increasing."

Unemployment rose to 5.2% in the three months to December, up from 5.1%, marking the highest level in five years and reflecting a cooling labour market since 2022. Average earnings excluding bonuses increased 4.2% year-on-year, down from 4.5% and in line with forecasts. A £25bn rise in employer national insurance contributions and national living wage increases have pushed up labour costs. Employment for those aged 34 and under has fallen by 242,000 since mid-2024 while employment for those 35 and over has risen by 71,000. Markets now price roughly a 76% chance of a March Bank of England rate cut from 3.75%.

Read at Business Matters