UK unemployment rate rises to 5.1%

The unemployment rate has risen to its highest level in almost five years, with younger workers bearing the brunt of the job losses, the official figures from the Office for National Statistics (ONS) show.

The UK's jobless rate rose to 5.1% in the three months to December, with the number of people on company payrolls down 726,000 on pre-pandemic levels.

Almost three-fifths of these were younger than 25 years.

There were, however, some early signs of stabilisation in the jobs market.

ONS said there was a small increase in the numbers of employees paid through payroll over the past couple of months, with 83,000 more people on the books in January compared with the previous month.

Average pay rose, too, by 4.7% including bonuses, although this was said to be a statistical quirk rather than a sign of lasting wage growth.

Statisticians said this was partly because of the disproportionate fall in the number of young, typically lower-paid workers. Adjusting for this, the ONS said underlying wage growth was "likely to be under 3%".

The ONS said 1.74 million people were unemployed in the October to December period, up 454,000 from the same quarter in 2019.

"Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis," said Jonathan Athow, ONS deputy national statistician for economic statistics.

"However, the proportion of people who are neither working nor looking for work has stabilised after rising sharply at the start of the pandemic, with many people who lost their jobs early on having now started looking for work."

The Bank of England is forecasting that the unemployment rate will rise sharply, peaking at an estimated 7.8% later in the year.

The Chancellor, Rishi Sunak, is preparing for next week's Budget, which is expected to set out further plans to help the labour market.

"I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy," Mr Sunak said.

"At the Budget next week, I will set out the next stage of our Plan for Jobs, and the support we'll provide through the remainder of the pandemic and our recovery." The Chancellor said.