By Don Nico Forbes
Unemployment in the U.K. remained at its highest level in nearly five years in the three months through January, as war in the Middle East threatens to hit growth and push the jobless rate even higher in the coming months.
The unemployment rate was 5.2%, unchanged compared with the three months through December, Britain's Office for National Statistics said Thursday. Annual wage growth, excluding bonuses, was 3.8%, compared with a revised 4.1%.
A consensus of economists polled by The Wall Street Journal expected a jobless rate of 5.2% and adjusted wage growth at 4.0%.
An early estimate of payrolled employees for February rose on month by 20,000, compared with an increase of 6,000 in January, the ONS said.
January's reading reflects a frail labor market after unemployment picked up steadily over 2025, driven higher by an increase in a tax on employers and the rise in U.S. duties.
U.K. luxury carmaker Bentley said Tuesday that it plans to cut roughly 6% of its workforce as President Trump's tariffs started to bite.
A stubbornly high rate of unemployment underscores broader stagnation in the economy at the start of this year. Figures published last week showed economic growth unexpectedly stalling in January.
The combination of a weak labor market and soft growth data had led to increased expectations of a rate cut by the Bank of England in March. But soaring energy prices amid conflict in the Middle East threaten to push up inflation and derail the central bank's rate path.
The BOE finds itself with a difficult decision to make: cut rates to shore up a softening economy and labor market or stay restrictive to keep inflation in check.
For now, economists expect the bank to remain in wait-and-see mode and hold rates at a meeting later Thursday, with the outlook hinging on how long the Middle East conflict persists.
Write to Don Nico Forbes at don.forbes@wsj.com
(END) Dow Jones Newswires
March 19, 2026 03:28 ET (07:28 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
