The rate of unemployment in the UK rose to 5.1% in the three months to December, official figures show.
The Office for National Statistics said 1.74 million people were unemployed in the October to December period, up 454,000 from the same quarter in 2019.
The figures show 726,000 fewer people are currently in payrolled employment than before the start of the pandemic.
Almost three-fifths of this fall, 425,000, has come from those aged under-25.
However, the ONS said that there were some “tentative early signs” of the labour market stabilising. There was a small increase in the numbers of employees paid through payroll over the past couple of months.
In January 2021, 83,000 more people were in payrolled employment when compared with the previous month.
“Our survey shows that the unemployment rate has had the biggest annual rise since the financial crisis,” said Jonathan Athow, ONS deputy national statistician for economic statistics.
“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.”
Despite this, Mr Athow told the BBC that the true underlying picture was not yet clear due to the high number of people still on furlough.
He said figures from early February suggested that about six million people were currently furloughed, adding: “There is a huge amount of uncertainty about what will happen to them when that scheme ends.”
The Chancellor, Rishi Sunak, is preparing for next week’s Budget, which is expected to set out further plans to help the labour market.
“I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy,” Mr Sunak said.
“At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery.”
