Unemployment in the UK has reached 5.2% in the last quarter of 2023, the highest in nearly five years, according to the Office for National Statistics (ONS). This figure matches economists' predictions and is up from 5.1% in the three months to November. The jobless rate has steadily increased since 2022. Businesses blame recent tax rises, such as higher national insurance and minimum wage hikes introduced by Rachel Reeves in her last two budgets. Wages excluding bonuses rose by 4.2% in the last quarter, down from 4.4% the previous month. In the private sector, pay increased by 3.4%, the lowest in five years, while public sector wages jumped 7.2%. Business surveys show signs of improvement in the jobs market. KPMG and REC report the smallest drop in permanent staff hiring in 18 months. The Bank of England’s CFO survey shows firms plan to raise employment—the first time in five months. The Bank of England is closely watching unemployment and wage growth as it considers future interest rate changes. It forecasts unemployment may reach 5.3% this year and wage growth to slow to 3.25% as inflation drops. The Bank held interest rates steady at 3.75% in its recent meeting.