The U.K. unemployment rate held at 5.1% in the three months to November, its highest level since early 2021. Wage growth excluding bonuses eased to 4.5%, down from 4.6% the prior month. The figures suggest the labor market is cooling, keeping pressure on the Bank of England to consider further policy easing.

This persistent unemployment level aligns with the Bank of England's own forecast for rates to hover around 5% for the next two years. Economists surveyed by The Times predict unemployment could climb to between 5% and 5.5% by the end of 2026, which would mark the highest rate in over a decade, excluding the pandemic era.

The central bank has already cut its key interest rate to 3.75%, with Governor Andrew Bailey recently switching his vote to support a reduction. With inflation approaching the 2% target, markets are pricing in additional cuts in 2026. The BoE's next decision in early February will be closely watched for signals on the pace of monetary easing.