![\"Rachel](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2025\/11\/Rachel-Reeves-Budget-2025.png\")
Unemployment has risen to its highest level in nearly five years, delivering a further reminder to Chancellor Rachel Reeves that businesses are struggling to meet the cost of hiring staff.<\/p>\n
The UK jobless rate ticked up to 5.2% in December from 5.1% in the three months to November<\/p>\n
It is at it highest since the three months up to January 2021 and compares with a rate of 4.1% when Labour took office in July 2024.<\/p>\n
Stephen Kinnock, a UK health minister, said: \u201cWe know that we had the best growth of all the G7 European countries last year, and on unemployment, I think we\u2019ve seen something like 440,000 new jobs created in the economy.\u201d<\/p>\n
Ms Reeves\u2019 2024 Budget hiked employer National Insurance contributions and saw a rise in the minimum wage, leading some businesses to slow down hiring and replacing outgoing workers.<\/p>\n
The Office for National Statistics (ONS) said the figures reflected \u201cweak hiring activity\u201d, but also that more people who are out of work are now looking for jobs.<\/p>\n
However, it has continued to advise caution when interpreting changes in the monthly unemployment rate and job vacancy numbers over concerns about the reliability of the figures.<\/p>\n
Luke Bartholomew, Deputy Chief Economist, at Abderdeen said: \u201cWith unemployment ticking up and payrolls declining again, this is yet another soft labour market report. <\/p>\n
\u201cAnd crucially, from the perspective of the Bank of England and the outlook for inflation, this weakness is continuing to pull down on wage growth. <\/p>\n
\u201cPrivate sector pay growth in particular has essentially returned to an inflation-target consistent rate, meaning that as and when inflation falls to 2% later this year it is likely to stay there rather than start increasing again. <\/p>\n
\u201cOf course, the inflation data tomorrow could throw a wrench in the works, but for now it seems there is a clear case for a further rate cut at the Bank\u2019s next meeting in March, and we continue to expect rates to fall to 3% later this year.\u201d<\/p>\n
\u2026 more follows<\/p>\n
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