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"The economy is screaming out for support and desperately needs a rate cut"

ended 12. June 2025

Newspage asked financial services experts whether the economy contracting in April could trigger a June rate cut.

One said: “The economy shrinking in April adds to the argument for a rate cut. Much will ride on next week's inflation data, which the Monetary Policy Committee will be watching closely. Lower rates will be good for business and good for borrowers but we may need to wait a little longer to get them if inflation proves stubborn.”

A second added: “The Bank of England is likely to focus on the inflation data coming next Wednesday but unless inflation has shot up, a rate cut could could well be on the cards to try and get growth going. Whether it works against a backdrop of increased business taxes is another question entirely.”

A third said simply: "The economy is screaming out for support and desperately needs a rate cut. The latest GDP data shows the economy is seriously flagging. However, whether we get a rate cut on Thursday of next week will likely be determined by the inflation data published Wednesday. A Big Wednesday lies ahead for UK plc." Views will appear below until 11:30.

8 responses from the Newspage community

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Daniel Hobbs
CEO at New Leaf Distribution
The economy is screaming out for support and desperately needs a rate cut. The latest GDP data shows the economy is seriously flagging. However, whether we get a rate cut on Thursday of next week will likely be determined by the inflation data published Wednesday. A Big Wednesday lies ahead for UK plc.
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Philly Ponniah
Chartered Wealth Manager and Financial Coach at Philly Financial
The economy shrinking in April adds to the argument for a rate cut. It suggests fragility in the recovery and reinforces the idea that high interest rates are dragging on growth. The slowing of the usually more resilient services sector shows demand is softening in areas that previously held up. Much will ride on next week's inflation data, which the Monetary Policy Committee will be watching closely. Lower rates will be good for business and good for borrowers but we may need to wait a little longer to get them if inflation proves stubborn.
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Harry Mills
Director at Oku Markets
Market bets on interest rate cuts from the Bank of England rose this week after soft employment data and an unexpectedly large contraction in output for April. The unemployment rate rose to 4.6% in May, its highest level since 2021, whilst payrolled employees fell by more than 100,000 - that makes a total of 276,000 fewer jobs since the Autumn Budget. The UK economy is stalling, and the news of a 0.3% month-over-month GDP contraction in April shouldn't surprise anyone, given the Government's anti-business agenda. The Bank of England's primary objective is price stability, so whilst I would like to see the Monetary Policy Committee cutting rates to spur growth, inflation remains sticky, meaning the Bank may not respond as swiftly as many of us would like. April's headline CPI number jumped to 3.5% year-over-year. The next release, for May, comes on the 18th of June, an important date for rate watchers.
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Rob Peters
Principal at Simple Fast Mortgage
The GDP contraction in April adds weight to the case for a rate cut, but the real decider will be next week’s CPI print. If inflation undershoots expectations, the doves on the MPC will have a stronger argument to move in June. But if CPI is sticky or rises, they’ll almost certainly hold fire and wait for more data. The weak growth numbers could at least limit the hawks, making a rate hike very unlikely, even in the face of a CPI surprise. Ultimately, we’re teetering on the edge, and the Bank may still choose to err on the side of caution.
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Tony Redondo
Founder at Cosmos Currency Exchange
The Bank of England should cut rates by 0.5%, but, as is often the case they will stay behind the curve and hold. CPI will probably come in higher than expected. The only 'good' news is that today's GDP data should ensure the Bank doesn't raise rates. That really would kill the economy stone dead.
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Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
With the economy contracting, a rate cut would seem more likely. The Bank of England is likely to focus on the inflation data coming next Wednesday but unless inflation has shot up, a rate cut could could well be on the cards to try and get growth going. Whether it works against a backdrop of increased business taxes is another question entirely.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The UK economy is shrinking, the workforce is shrinking and the government’s credibility is shrinking with it. We’re facing black holes in public finances, flatlining growth and a cost-of-living crisis that’s far from over. The country is sick and it needs more than sticking plasters, lukewarm promises and excuses. Whether it’s a rate cut from the Bank of England or fiscal firepower from the Treasury, something has to give. Delay is no longer a strategy, it’s part of the problem.
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Dr. James Fox
Director at Trade Pass
The 0.3% fall in UK GDP in April makes a June rate cut by the Bank of England feasible but still unlikely. Much of the contraction will be attributed to temporary distortions, such as manufacturers front-loading activity in Q1 to avoid US tariffs and a rush in legal and real estate services ahead of stamp duty changes. However, the underlying picture is more complicated. The government's fiscal policy is likely slowing growth in the near term. Businesses are grappling with higher staffing costs while consumer confidence has taken another hit. Given these mixed signals and ongoing global uncertainties, policymakers are likely to wait for clearer data before cutting rates again.