LONDON — Britain’s unemployment rate climbed to 5.2% in the final quarter of 2025, marking its highest level in five years and underscoring mounting pressure on the country’s fragile economic recovery.

The latest data released Tuesday by the Office for National Statistics (ONS) showed a slight uptick from the 5.1% recorded in the three months ending November. The figure represents the highest jobless rate since January 2021, when the labour market was heavily impacted by the Covid-19 pandemic.

ONS Director of Economic Statistics Liz McKeown noted that the number of employees on company payrolls continued to decline toward year-end, reflecting subdued hiring activity across multiple sectors.

“The number of workers on payroll fell further in the final quarter, signalling weaker demand for labour,” she said.

Market analysts believe the softer employment landscape strengthens the case for the Bank of England to consider trimming its benchmark interest rate as early as next month — a prospect that contributed to downward pressure on the pound.

The labour data follows official figures released last week showing the UK economy expanded less than anticipated in the closing months of 2025, reinforcing concerns about the pace of growth.

Jonathan Raymond, investment manager at Quilter Cheviot, said the latest numbers suggest the labour market is beginning to strain.

“Continuing the recent trend, the UK labour market is showing signs of creaking at a time when economic growth remains difficult to achieve,” he said.

Meanwhile, the ONS reported that wage growth cooled further to 4.2% in the fourth quarter. Economists expect overall UK inflation to ease in the coming months, potentially giving policymakers more flexibility to support the economy.