Next Week, the Bank of England’s Only Rational Move Is to Cut Rates

Next Week, the Bank of England’s Only Rational Move Is to Cut Rates

Bank of England: Time to Let the Economy Breathe

Picture the UK economy as a over‑stretched rubber band—tightening it further will eventually snap it.
That’s the gist of why holding rates steady again next week would be indefensible.

Stagnation is the New Normal? Not!

GDP was flat in May after a 0.2% bump in April.
Stagnation? Basically: the country’s just floating, while the European Central Bank is already easing and the US is making moves to cut.

With a base rate of 5.25% – the highest in 16 years – businesses face:

  • Lower investment
  • Shrinking margins
  • Postponed hiring
  • Cancelled expansion plans

In short, an economic engine running on fumes, snubbing opportunity and draining confidence.

SMEs: The Backbone Under Fire

SMEs make up over 99% of UK firms and employ more than 16 million people.
Their survival hinges on credit; high rates starve them of the “oxygen” they need.

Even with inflation dived to 2.0% in May—inside the target—rates stay stuck at levels meant for a different era:

  • Mortgages still punch hard at borrowers
  • Commercial loans carry costs that no longer reflect reality
  • Real incomes keep suffering
  • Consumer demand stagnates
Labour Market: A Wary Wave

Unemployment rose to 4.4%, the highest in almost three years.
Vacancies are falling, hiring plans shrink, and wage growth, though still high in some sectors, is moderating.

Keeping rates too high risks real job losses and a delayed recovery that costs way more to fix later.

Global Context: The Race is On

Unlike the ECB, which is easing, and the Fed, which is nudging toward cuts, the Bank of England could keep its stubborn stance.

That would make sterling artificially strong, hurting exports just when they need a boost.
UK firms would be less competitive abroad, and foreign investors would think twice about entering a market where capital is expensive and policy is out of sync.

No Political Excuses

The election is over.
The government has a clear mandate to create economic momentum, not paralysis.

A next‑week cut would show the Bank is aligned with business risks and has the foresight to act, not just react.

Over‑Stretched Risk: It’s Time to Move

Some argue sticking to rates is safer. That’s a misreading.
Every month of delay increases the chance of a policy misstep, leaving the UK weaker, slower, and more divided.

Business surveys from the BCW and CBI reveal waning optimism and rising concern over borrowing costs. The real cost of doing business is still sky‑high.

Conclusion: Courage, Clarity, and a Rate Cut

The numbers are clear: inflation has fallen, growth has vanished, and businesses call for relief.

Acting now isn’t a gamble—it’s a long‑over‑due correction.