The UK unemployment rate rose to 5.1 per cent in the three months to December, the biggest annual increase since the financial crisis, latest figures show.
The rate rose 0.4 percentage points between October and December, according to the Office for National Statistics, 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.
This figure has increased to its highest level since early 2016.
The ONS report revealed that 1.74 million people were unemployed during the three months, up 454,000 from the same period in 2019.
Nearly 33 million people were in employment, a fall of 541,000 compared to a year earlier, it said. This was the largest annual decrease since May to July 2009.
The figures also revealed that there were 726,000 fewer people in payrolled employment than before the start of the pandemic. Almost three-fifths of this figure came from the under 25s, according to a new age breakdown published for the first time today.
However, despite the bleak figures, the ONS said there were some “tentative early signs of the labour market stabilising” when looking at the small increase in the numbers of employees paid through payroll over the past few months.
In January 2021, 83,000 more people were in payrolled employment when compared with December 2020.
Deputy national statistician for economic statistics Jonathan Athow says: “Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis.
“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 report also revealed that the number of job vacancies in November 2020 to January 2021 was 26 per cent lower than a year ago. This is an improvement on the position in summer 2020 when vacancies were down by nearly 60 per cent year on year, but the rate of improvement has slowed in the past few months.
The ONS said further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry.
AJ Bell financial analyst Laith Khalaf says: “We might have a roadmap out of lockdown, but unemployment is still heading in the wrong direction and things will get worse before they get better. A cautious release from social restrictions may forestall a future lockdown, but it also serves to dampen economic activity and put jobs under pressure.
