London Daily

Focus on the big picture.
Wednesday, Jul 22, 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
UK Universities and Industry Expand Space and Defense Research Partnerships
House of Lords Approves Social Housing Bill Amendments on Shared Ownership Rights
House of Lords Advances Civil Aviation Bill With New Passenger Protection Measures
UK Government Suspends Tariffs on Fertilizer and Food Imports to Reduce Costs
Russell Group Universities Support New UK Business Department Focused on Innovation
UK Parliament Opens Inquiry Into Transport Barriers Facing Young Jobseekers
Home Builders Federation Calls for Lower Costs as New UK Government Sets Housing Priorities
Andy Burnham Meets UK Devolved Leaders to Strengthen Regional Cooperation
Andy Burnham Holds First International Calls With Trump, Macron, and Zelenskyy
Andy Burnham Reshuffles Cabinet With John Healey Appointed Chancellor of the Exchequer
Andy Burnham Government Removes VAT From Electricity Bills to Cut Household Costs
Andy Burnham Becomes United Kingdom Prime Minister After Sir Keir Starmer Resigns
Miliband Sets Climate and International Law at Centre of UK Diplomacy
US Gasoline Returns to $4 as Renewed Iran Fighting Disrupts Oil Flows
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Orders 50% Tariffs on Selected Canadian Imports
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
US Judge Pauses Paramount Skydance and Warner Bros Discovery Merger Over Antitrust Concerns
NHS England Faces Growing Retention Pressure Among Younger Midwives
UK Data Centre Expansion Faces Water and Grid Capacity Challenges
UK Defence Shares Rise After John Healey Appointment and Continued Spending Commitments
OECD Urges UK Government to Review Pension Triple Lock to Protect Public Finances
Bank of England Keeps Cautious Approach as Energy Costs Threaten Inflation Progress
County Councils Call for Wider Devolution and Long-Term Social Care Funding Reform
IMF Urges UK Government to Maintain Fiscal Discipline as Growth Forecast Slows
Russian Warship Holds Live-Fire Exercises Near UK Coast as Royal Navy Monitors Activity
Mitie Agrees Three Point One Billion Pound Takeover by OCS in Another Blow to London Listings
JPMorgan Chase Warns Bank Levies Could Hit UK Growth and Drive Capital Away
UK Unemployment Holds at Four Point Nine Percent as Labour Market Shows Resilience
UK Government Borrowing Falls Below Forecasts as Treasury Receives Early Fiscal Boost
John Healey Cuts VAT on Household Electricity Bills After Cancelling National Digital ID Scheme
Andy Burnham Forms New Labour Government With Ten-Year National Renewal Plan
EU Imposes Record €550 Million Digital Services Fine on AliExpress
UK Publishes Updated Consumption-Based Carbon Emissions Data
English Regions Prepare for Expanded Devolution and Infrastructure Powers
Russell Group Backs New Government and Calls for Stronger University-Industry Links
Bank of England Maintains Restrictive Monetary Policy Amid Persistent Inflation
Climate Progress Report Renews Debate Over the UK's Net Zero Strategy
New UK Government Launches Drive to End Rough Sleeping and Expand Social Housing
Prime Minister Andy Burnham Appoints John Healey as Chancellor in Cabinet Reshuffle
OECD Calls for Structural Reforms as UK Economy Faces Slower Growth
International Monetary Fund Expects UK Economic Growth to Slow to One Percent in 2026
Andy Burnham Takes Office as UK Prime Minister and Unveils Decade-Long Reform Agenda
London’s Housing Starts Collapse as Planning and Building Costs Stall Development
Charlie Sheen’s Daughter: "My Dad Didn’t Buy Me a House, My Breasts Bought It"
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Naturally Conceived Identical Quadruplets Born in Rare Brisbane Delivery
Tate Brothers Fight British Extradition Bid After Miami Arrests
×