UK unemployment has risen to 5.2% in the three months to December, the highest since early 2021, while pay growth is cooling, a sign the jobs market is losing momentum. The ONS data show wages excluding bonuses rose 4.2%, with private sector pay at 3.4%, suggesting less pressure for firms to keep lifting prices to fund wage bills. That matters for inflation and the Bank of England, which has held Bank Rate at 3.75% but is already split, and markets now see a March cut as increasingly likely if inflation behaves. In markets, expectations of easier policy pushed government bond yields lower and left the sterling weaker.