The U.K. unemployment rate stayed elevated in November while wage growth slowed, according to data released on Tuesday—strengthening expectations that the Bank of England could deliver further interest rate cuts as the year unfolds.
Figures from the Office for National Statistics showed the jobless rate holding at 5.1% in the three months to November, unchanged from the previous period and marking the highest level since early 2021.
The Bank of England has signaled that unemployment is likely to hover around the 5% mark over the next two years. Meanwhile, economists surveyed by the The Times expect joblessness to rise to between 5% and 5.5% by the end of 2026—potentially the highest level in more than a decade outside the pandemic period.
At the same time, wage growth across the broader economy continued to cool. Average earnings excluding bonuses increased at an annual pace of 4.5% in the three months to November, down from 4.6% in the previous reading.
The Bank of England lowered its benchmark interest rate by 25 basis points to 3.75% at its December meeting, extending a series of cuts that began in August 2024 as inflation eased closer to the 2% target.
The central bank’s next policy decision is due in early February. The December vote was narrowly split 5–4, with Governor Andrew Bailey backing the rate cut. Policymakers continue to monitor labor market conditions closely, with additional rate reductions increasingly expected in 2026.
