Bank of England should cut rates to boost consumer spending, says TUC

"The Bank of England has a crucial role to play here. Last year they were overly cautious and too slow to act. They should go for growth with a sequence of quick-fire cuts this year. Lower interest rates would help households and help the high street putting money in people's pockets to spend in shops and restaurants, and boosting confidence for consumers and for businesses."

"Official data showed GDP expanded by just 0.1% in the final quarter of last year. The TUC said that was because consumer demand was being depressed by high borrowing costs, with the Bank's base rate set at 3.75%. Its analysis shows consumer demand has grown more slowly in the UK over the past three years than in 32 of the 37 industrialised economies in the Organisation for Economic Co-operation and Development many of which have still achieved low inflation."

The Trades Union Congress urges the Bank of England to cut interest rates to rekindle economic growth, arguing households are cash-strapped and lag international peers. Official GDP rose only 0.1% in the final quarter. The Bank's base rate stands at 3.75% after six cuts since mid-2024, and the monetary policy committee recently voted 5-4 to leave borrowing costs unchanged. Some committee members fear high wage growth could reignite inflation, but weak growth has reduced consumer demand's contribution to GDP to zero over the past two years. Markets expect a March rate cut, though not a repeat of last year's sequence. The chancellor introduced budget measures to lower inflation, including energy bill cuts from April.

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