Borrowers were yesterday offered a sliver of hope as investors bet the Bank of England will speed up interest rate cuts to prop up the economy. Economists at Barclays said a trade war will wipe 1.5 percentage points off UK growth this year – sparking a recession.
And the National Institute of Economic and Social Research estimates tariffs will cut UK growth to close to zero next year. Investors think two more rate cuts are seemingly nailed on and a third is now a strong possibility.
The first looks set for next month – forecast to be a reduction from 4.5 per cent to 4.25 per cent. Thomas Pugh, an economist at a RSM UK, said Britain was set for ‘another year of stagnation at best’.
‘We anticipate three more cuts in 2025,’ he added.
George Brown, an economist at Schroders, said the US Federal Reserve was left to grapple with weaker growth and higher inflation.
‘But broadly we expect the Bank of England and the ECB to insure against risks by cutting rates further.’
Pressure: Economists at Barclays said a trade war will wipe 1.5 percentage points off UK growth this year – sparking a recession.
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