Finance
UK jobless rate hits highest in over a decade outside pandemic
Published by Global Banking & Finance Review®
Posted on February 17, 2026
2 min readLast updated: February 17, 2026
Quick Summary
UK wage growth slowed to 4.2% at the end of 2025, impacting inflation and interest rates. Economists and the Bank of England are closely monitoring these trends.
UK Jobless Rate Reaches Highest Level Since 2015, Excluding Pandemic
UK Job Market Overview
LONDON, Feb 17 (Reuters) - Britain's labour market weakened again with the jobless rate at its highest since 2015, excluding the pandemic period, and wage growth slowing again, according to data likely to add to bets on a Bank of England interest rate cut as soon as next month.
Current Unemployment Trends
The unemployment rate rose to 5.2% in the fourth quarter of 2025, the highest since the three months to October 2015 although it hit 5.3% in late 2020.
Impact on Wage Growth
The jobless rate is calculated from a survey that the ONS is in the process of overhauling after response rates dipped too low during the pandemic. However, analysts say the quality of the data has improved in recent months.
Bank of England's Response
Sterling fell by more than a third of a cent against the dollar after the figures were published.
The data also showed weaker inflationary heat coming from growth in workers' earnings.
Annual wage growth, excluding bonuses, slowed to 4.2% in the last three months of 2025 compared with the same period a year earlier, the Office for National Statistics said.
Economists polled by Reuters had mostly expected growth in regular average weekly earnings of 4.2%, down from 4.4% in the three months to November.
The BoE is watching pay as a gauge of how long Britain's above-target inflation is likely to last.
Earlier this month the central bank said wage growth in the private sector was starting to reflect the weakening of the jobs market after an unexpectedly strong run.
Private sector annual wage growth excluding bonuses - a measure of inflation heat closely watched by the BoE - slowed to 3.4% in the three months to December, down from 3.6% in the three months to November.
Investors on Monday were almost fully pricing in two quarter-point interest rate cuts by the end of this year as worries about inflation gave way to concerns about the jobs market and the broader economy.
Last week ONS data showed weaker-than-expected growth in gross domestic product in the October-to-December period, hurt in part by speculation about tax increases in finance minister Rachel Reeves' budget at the end of November.
(Writing by William SchombergEditing by Suban Abdulla)
Key Takeaways
- •UK wage growth slowed to 4.2% in late 2025.
- •Economists expected this slowdown in wage growth.
- •Bank of England monitors wages for inflation impact.
- •Interest rate cuts anticipated due to economic concerns.
- •GDP growth weakened by tax speculation and budget issues.
Frequently Asked Questions about UK jobless rate hits highest in over a decade outside pandemic
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
2What are interest rates?
Interest rates are the cost of borrowing money, expressed as a percentage of the total loan amount. They can influence economic activity, including spending and investment.
