London Daily

Focus on the big picture.
Saturday, Oct 17, 2026

UK unemployment rate increases while pay growth rises faster than expected

UK unemployment rate increases while pay growth rises faster than expected

A mixed set of figures for the economy also show how the number of people dubbed economically inactive because of long-term sickness has reached a record high.

The UK's unemployment rate ticked up to 3.8% in the three months to February, according to official figures that also highlighted a faster than expected spike in wage rises.

The Office for National Statistics (ONS) said the jobless rate rose from 3.7% due to a surge in the number of people unemployed for more than six months.

The rate rose despite part-time employees and self-employed workers driving an increase in the employment rate.

There was also a signal in the wider ONS figures of upwards pressure to come on the unemployment rate as the number of people claiming jobless benefits rose by 28,200 in March.

The data also revealed that vacancies fell by another 47,000 to 1.1 million in the three months to March.

The ONS said this reflected "uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment".

Total pay, including bonuses, grew at an annual rate of 5.9% in the three months to February.

That was up from the 5.7% measured the previous month and at a time when energy-driven inflation remained at a 40-year high above 10%.


The rate of inflation currently stands at 10.4%.

Regular pay growth was static at 6.6%.

The pace of wage rises is a closely-watched measure as the cost of living crisis evolves - and not just for pinched consumers.

As strike action over pay continues to hammer several sectors including the NHS, the Bank of England has urged wage restraint.

It has been worried that pay growth to match inflation only adds to upwards pressure on prices in the economy by spurring demand.

Policymakers next meet in May. By then, we will know whether inflation has eased to a single-digit figure.

The ONS data showed that the gap between public and private sector earnings growth continued to narrow as more settlements were made.

There was some brighter news in that the economic inactivity rate, which has come into sharp focus since the COVID pandemic, decreased by 0.4 percentage points on the quarter, to 21.1%.

It was driven by all age groups amid government efforts to get more people back to the workplace but spearheaded by students.

The ONS data highlighted that the number of people inactive because of long-term sickness increased to a record high.

Chancellor Jeremy Hunt said of the figures: "While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.

"To help families in the meantime, we are making work pay with a record increase in the National Living Wage, while providing cost of living support worth an average of £3,300 per household this year and last, funded through windfall taxes on energy profits."

Rachel Reeves, the shadow chancellor, said the Conservatives had held the country back.

"Their lack of ambition for Britain is leaving real wages down, families worse off, hundreds of thousands fewer people in work and our economy lagging", she responded.

Newsletter

Related Articles

0:00
0:00
Close
Russell Brand Trial Begins at Southwark Crown Court
UK Parliament to Debate Climate Risks and Council Tax Following Public Petitions
Department for Transport Demands Safety Audits Following Regional Rail Disruptions
House of Lords Scrutinizes Amendments to Armed Forces Bill
Devolved Administrations in Scotland and Wales Criticize Post-Brexit Funding Framework
Prime Minister Andy Burnham Defends Middle East Military Support Under Parliamentary Scrutiny
NHS Leaders Warn of Severe Pressure on Hospitals from Winter Virus Outbreaks
Retailers and Business Groups Lobby Chancellor for Relief from Rising Employment Taxes
City of London Taskforce Urges Radical Reform to Prevent UK From Becoming "Incubator Nation"
Bank of England Officials Signal Potential November Interest Rate Hike
Institute for Fiscal Studies Warns of £35 Billion Funding Gap in Upcoming Autumn Budget
IMF Upgrades UK Growth Forecast to 1.3% for 2026
Former UUP leader Jeffrey Donaldson sentenced to 15 years in prison for historical child sex offences
UK ministers adopt independent commission blueprint to fast-track AI in the NHS
Labour leadership orders local councillors to end power-sharing deals with Green Party
UK government considers regulatory intervention in proposed Sky and ITV merger
Environment Agency declares severe drought across six English regions as reservoirs hit critical lows
NHS England issues new guidance prohibiting transgender women from female-only wards
Norwegian teenager sentenced to 20 years for part of Iran-backed assassination plot in Britain
UK government threatens complete visa ban on Eritrea over refusal to accept deportees
UK Treasury lobbies UBS to move global headquarters to London amid banking sector tax threats
MI5 Warns of Growing Russian Sabotage and Espionage Threats Across Britain
UK Prime Minister Andy Burnham Plans Brussels Talks to Renegotiate Post-Brexit Trade Deal
MI5 Warns of Rising Russian and Iranian Sabotage Threats to British Military Facilities
UK Prime Minister Andy Burnham Pledges Closer EU Ties as MI5 Reveals Russian Brexit Interference
UK Orders Security Review Following Reported Killing of Former Politician Ann Widdecombe
UK Prime Minister Andy Burnham Meets German Chancellor Merz to Strengthen European Security Ties
Nearly 100,000 NHS Patients Treated in Hospital Corridors as England Braces for Winter Pressures
UK Government Rejects US-Russia Diesel Agreement and Reaffirms Sanctions Against Moscow
UK and Germany Agree to Deepen Security and Economic Cooperation Following Berlin Talks
British Prime Minister Burnham Pledges Closer EU Ties During Visit to Germany
UK Announces New Sanctions on 17 Russia-Linked Entities During Foreign Secretary's Ukraine Visit
UK and Germany Finalize Kensington Treaty to Strengthen Defense and Technology Cooperation
Britain Maintains Diplomatic Mission in East Jerusalem Despite Israeli Closure Deadline
English Councils Push Government to Rethink Proposed Funding Cuts
Scottish Homebuilding Falls to Lowest Level in 11 Years
BBC Chief Matt Brittin Defends Restructuring as Staff Challenge Job Cuts
UK Finance Warns High Energy Costs and Bond Yields Are Complicating Fiscal Outlook
UK Adopts All 44 Recommendations on Regulating AI in Healthcare
Chancellor John Healey Prepares Autumn Budget as Borrowing Costs Strain Public Finances
UK Investigators See Strong Indications of Iranian Link After RAF Fairford Security Operation
Laura Trott Pledges Tighter Controls on Political Activism in UK Classrooms
Welsh Ministers Launch Long-Term Review of North Wales and Anglesey Crossings
Welsh Government Orders 18-Month Study of Road Solutions Around Newport
Reform UK MP Sarah Pochin Faces Scrutiny Over £800,000 Second Home Purchase
British Households Grow More Concerned About Fuel and Energy Prices
NHS Leaders Warn of Rising Winter Pressure on Emergency Departments
Kemi Badenoch Proposes £2.3 Billion Employer National Insurance Cut for Young Workers
Middle East Conflict Could Erase UK Fiscal Headroom, Economists Warn
Manchester City Found Guilty of Multiple Premier League Financial Rule Breaches
×