32. Weekly Newsletter
Bank of England cuts interest rates
The Monetary Policy Committee voted this week to slash interest rates providing a boost to the new Labour government to provide economic growth. The BoE reduced interest rates to 5% from 5.25% which is the lowest it has been since 2020. Andrew Bailey, BoE governor stated that the reason for the cut was due to inflation slowing down but also said that it is important to keep inflation low by not cutting interest rates “too quickly or by too much”.
Bailey also noted that interest rates are unlikely to be cut much in the coming months not only to keep inflation down but also because it was a closely run decision with the MPC voting to slash rates in a five to four vote. Following the announcement, the pound dropped to a month-low against the dollar with a 0.8% loss. This will provide a platform for economic growth as inflation has been stabilised at 2% since the end of May and UK households and businesses had been struggling against 16-year record high interest rates.
Newspapers
Some of the British headlines from the past week are:
- Financial Times- ‘GB’s Olympians warned of potential French tax shock’
- Financial Times- ‘UK house prices rise more than expected in July’
- Financial Times- ‘GPs in England to cap appointments in latest industrial action’
- Financial Times- ‘UK rioters to face ‘swift justice’ as Starmer convenes Cobra over violence ‘
- The Times- ‘Stock market jitters as global sell-off gathered pace — as it happened’
UK pub spending surges
UK pubs have been struggling year-on year with a loss of 239 pubs in 2024 alone. This has been due to the cost-of living crisis and high inflation influencing consumer spending.
On the day of the Euro 2024 final, spending in pubs and bars practically tripled compared to one year ago. Card transactions in pubs and bars went up by 195.6% which accounted for almost 50% of transactions on a national scale. The surge also compounded a boost during the whole month of July as spending rose by 4.9% making it the highest rise since January. However, this boost was not enough to offset a 0.3% year-on-year decline in consumer spending.
