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"A cautious 0.25% cut" to the base rate possible next week after GDP data

ended 13. December 2024

The economy contracted by 0.1% in October, following a similar fall in September. And all this before the effects of the Budget feed through into the economy. Newspage asked experts whether the contracting economy could see the Bank of England cut more aggressively next year now and whether there is a chance of a 0.25% cut next week. Their views are below. 

8 responses from the Newspage community

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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
The economy contracting by 0.1% in October, following a similar fall in September, raises the possibility of the Bank of England acting more aggressively on interest rates next year. While the effects of the Budget are yet to be felt, the overall economic environment—characterised by stagnant growth and rising debt burdens—mirrors concerns faced by other central banks globally. For instance, the Bank of Canada has recently cut rates by 0.5%, and the European Central Bank by 0.25%, as they grapple with no growth and inflationary pressures. These actions highlight a broader trend among Western economies, which appear to be heading towards stagflation—a mix of stagnant growth and persistent inflation reminiscent of the 1970s. As for the Bank of England’s immediate decision next week, the consensus now might lean towards a cautious 0.25% cut.
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Prem Raja
Head of Trading Floor at Currencies 4 You
With the economy contracting in October, the Bank of England will have a lot more to discuss next week and it may have to cut rates sooner than it had originally intended to. Currently, there is no rate cut priced in for December but after seeing this data I think Threadneedle Street will have to rethink their options. We cannot now rule out a 25 bps cut in December, as the economy clearly needs the boost and a rate cut may be the way to begin stimulating some growth.
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Iain Swatton
Director at Exemplar Financial Services
The latest GDP figures highlight a stalling economy in urgent need of a boost. The Bank of England must act decisively to cut interest rates and revive growth. Businesses are faltering, consumer confidence is waning, and the property market remains fragile. Delaying action risks deeper stagnation. Bold and immediate rate cuts are essential to restore momentum and rebuild economic confidence.
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Riz Malik
Independent Financial Adviser at R3 Wealth
It is down to the Bank of England to save UK Plc. Rather than setting up a Department for Economic Efficiency, our government has set up Department for Business Prevention. Until that changes, lowering the cost of borrowing will be the only thing that can kickstart this economy. The Government is out of ideas and out of its depth.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The spluttering of the UK economic engine won't be enough for the Bank of England to panic, so a base rate cut in December remains unlikely. They will keep the nitrous in the tank to boost the economy when the full impact of the Autumn Budget hits home and the UK is on the canvas.
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Ken James
Director at Contractor Mortgage Services
The only reduction we will see this year is in our bank balances. Even though the economy is shrinking and the cost of living is increasing, we will not see a shift this year in the base rate. It will also take time for the government's Budget to take effect on the economy. We will see the true impact more fully as we head through a winter of discontent into 2025.
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David Stirling
Independent Financial Adviser at Mint Wealth
The economy is flatlining at present and the full effects of October's Budget have yet to be felt. It's a tricky position for the government and Threadneedle Street. Do they give the economy a quick defibrillation and cut rates in December or do they continue to cause heartache to borrowers into 2025? Either way, their policies do not seem to be tackling the underlying conditions to help business and the economy recover and prosper, and we seem to be hurtling into recession.
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Elliott Culley
Director at Switch Mortgage Finance
A contracting economy would normally make base rate cuts a real possibility. However the Bank of England is unlikely to change anything before Christmas and will want to see the effects of the Budget filtering through before they make any decisions.