The UK unemployment rate ticked up to 5.2% in December. its highest level since 2015 except for the pandemic period, setting the stage for the Bank of England to ease its monetary policy.
UK Jobless Data Set Stage for BoE Easing
17 February 2026 - 12:15 CET
Labour market data
The figure was in line with economists' expectations and above the 5.1% recorded in November.
The number of payrolled workers fell by 6,000 between November and December according to revised figures from the Office for National Statistics (ONS), based on data from HM Revenue and Customs.
Annual average earnings growth was 4.2% in nominal terms, in line with economists' expectations, with 7.2% growth in the public sector and 3.4% in the private economy. The relatively high public-sector figure was due to base effects related to some pay rises being paid earlier in 2025 than in 2024, according to the ONS. This effect reached its peak last month and is expected to phase out over the next few months.
When adjusted for inflation, wage growth was a mere 0.5%.
ONS Director of Economic Statistics Liz McKeown said the drop in payrolls reflected weak hiring activity.
Bank of England rate cuts seen aheadThe Bank of England’s Monetary Policy Committee last month kept the key benchmark lending rate on hold at 3.75%, voting 5-4 against a 25 basis-point while signalling potential future easing. The MPC's report, released along with the rate decision, said that on the basis of current evidence, the rate is likely to be reduced further.
ING economist James Smith said that “barring any surprises in next month’s data – or with inflation tomorrow – a March rate cut looks highly likely. We expect another cut in June, and we don’t rule out the Bank taking rates even lower as it becomes more evident that inflation risks are subsiding.”
Money markets are pricing close to a 75% chance that the BoE will lower its benchmark rate to 3.5% at its next meeting in March.
