Britain’s unemployment rate edged higher at the end of 2024, adding to concerns over the stalling economy. According to the Office for National Statistics (ONS), unemployment rose to 4.4% in the three months leading to November, up from 4.3% recorded in the preceding three months.
Despite the rise in unemployment, wage growth also accelerated. Average regular pay increased by 5.6%, surpassing the UK’s annual inflation rate. The ONS attributed this uptick primarily to robust pay increases in the private sector.
Liz McKeown, the ONS director of economic statistics, noted that real pay growth, which accounts for inflation, also saw a slight improvement.
However, analysts believe the rise in wages is unlikely to deter the Bank of England from its anticipated interest rate cut in February.
“While rising wages reignite inflation concerns, softening unemployment figures and the expectation of a downward trend in pay growth suggest the Bank of England is still likely to cut rates,” said Matt Britzman, a senior equity analyst at Hargreaves Lansdown.
The UK economy remains in a delicate balance as policymakers navigate rising wages, persistent inflationary pressures, and weakening employment figures.