Figures from the Office for National Statistics (ONS) show annual growth in total average weekly earnings rose by 6 per cent in the three months to December.

UK pay growth has risen six per cent despite job loss warnings after Labour Party Chancellor Rachel Reeves’s budget. Figures from the Office for National Statistics (ONS) show annual growth in total average weekly earnings rose by 6 per cent in the three months to December.

That’s up from 5.6 per cent in November and above a 5.9 per cent forecast made by City economists. Regular pay, excluding bonuses, accelerated from 5.6 per cent to 5.9 per cent, matching estimates and highlighting the challenge for the Bank of England as it considers cutting interest rates. The pound rose against the dollar after the data.

Unemployment remained unchanged at 4.4 per cent, confounding expectations of a marginal increase to 4.5 per cent, while the number of employees on company payrolls was broadly unchanged in the final quarter of the year.

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Rob Wood, the chief UK economist at the consultancy Pantheon Macroeconomics, said: “Employment has stalled rather than collapsed. That is far from a rosy situation as payroll tax hikes, surging global uncertainty and a half year of weak economic growth take a toll on employment. But employment is holding up better than some dire business surveys.”

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “Wages have outpaced inflation again, easing the pressure on budgets and making life a little more comfortable. However, we can’t afford to relax just yet because wage hikes raise the spectre of inflation, which could be lurking around the corner.”

Liz Kendall, the work and pensions secretary, said: “Since July wages have continued to grow at pace, putting vital money back in people’s pockets as we work to make work pay and improve living standards for all.

“But these figures also show that too many people are being locked out of work and denied that chance, including those sick and disabled. Instead of writing people off and labelling them, we must step up our support.”