Last week, the Bank of England cut interest rates again from 5% to 4.75%. The Bank’s Governor reiterated that he will take a gradual approach to further reductions in the base rate.
As businesses continue to digest the difficult implications of the Budget, a further interest rate cut is some good news for firms.
The cost of borrowing remains a major barrier to investment. British Chambers of Commerce research shows less than a quarter of companies boosted investment in Q3. The economy will continue to struggle until this changes.
The continued easing of inflation is likely to translate into further gradual rate cuts. However, there could be some bumps on the way. Services inflation remains stubborn, and major global conflicts continue to bring uncertainty. A decisive Trump presidential victory has powered US stocks to all-time highs, but a policy of tariffs could be inflationary.
We’re expecting to see a number of long-term plans from the UK Government early next year covering infrastructure, investment and trade. It’s critical that these plans are outlined and delivered at pace, to give business the opportunity to help drive growth.
