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"Flat GDP data adds weight to the argument for a more dovish stance from the Bank of England"

ended 11. September 2024

Following this morning's flat GDP data, Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, has said that the Bank of England may need to “recalibrate its monetary policy position, potentially accelerating its planned transition to a dovish stance.” Meanwhile, Anita Wright, Independent Financial Adviser at Bolton James, said of the Bank of England: ”It’s no longer a matter of if they’ll reduce the base rate: it’s a matter of how soon they’ll pull the trigger." Riz Malik, Independent Financial Adviser at R3 Wealth, added: “When you can buy a pizza in instalments, you know the country is in serious trouble. The misery of interest rate hikes has impacted the nation and the flatlining of the UK's economic growth evidences this. At this point, it is not a question of if rates will be cut before the year is out but by how much. If the Bank of England wants to stimulate growth, rates need to come down quicker. It's that simple.” For the views of experts, see below. 
 

10 responses from the Newspage community

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Anita Wright
Independent Financial Adviser at Ribble Wealth Management
Flat GDP data adds weight to the argument for a more dovish stance from the Bank of England. It's a clear signal that the UK economy is stalling. The Bank of England has been walking a fine line between controlling inflation and avoiding a downturn. With growth stalled and consumer confidence shaky, Threadneedle Street faces mounting pressure to reconsider its approach. Inflation may still be a pressing concern, but the narrative is shifting, and stagnant growth can't be ignored any longer. The Bank of England may be forced to reassess its stance sooner rather than later, especially if further economic weakness creeps in over the next few months. While inflation has dominated policy decisions, the BoE can’t afford to let a recession brew in the background. If growth remains stuck, a rate cut before the year’s end could become a necessary tool to spark momentum. It’s no longer a matter of if they’ll reduce the base rate: it’s a matter of how soon they’ll pull the trigger.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
A rate cut is desperately needed on the back of this concerning GDP data. Let’s hope the Bank of England cut again before the year is out. It’s a sure sign that people are struggling so a rate cut will ease the pain for many. The next six months are still going to be very painful for more borrowers coming off long-term, ultra-low rate fixed deals.
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Riz Malik
Independent Financial Adviser at R3 Wealth
When you can buy a pizza in instalments, you know the country is in serious trouble. The misery of interest rate hikes has impacted the nation and the flatlining of the UK's economic growth evidences this. At this point, it is not a question of if rates will be cut before the year is out but by how much. If the Bank of England wants to stimulate growth, rates need to come down quicker. It's that simple.
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Michelle Lawson
Director at Lawson Financial
All eyes should be firmly set on the prize of a base rate cut. The economy appears to have gone into reverse and not forwards as Labour promised. It is early days but with the upcoming October Budget I’m fearful that a recession could be on the cards.
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Craig Fish
Director at Lodestone Mortgages
Too little too late is the reason we are in this position, so to avoid more of the same the decision makers on Threadneedle Street need to stop doing the same. The base rate needs to come down, and quicker than expected. I still see only one more cut this year, but hope that cut is at least 50 basis points.
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Justin Moy
Managing Director at EHF Mortgages
When the world's combined economy starts to scream for rate cuts on a global basis, the Bank of England will have no option but to react, and quickly. Yet again we always seem to be behind the curve. A cut by Christmas is essential, and 0.5% would be the best outcome for borrowers.
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Chris Barry
Director at Thomas Legal
Labour claim to have inherited a spending deficit in addition to their own spending commitments. Some of this will be covered by the upcoming rise in taxes but an amount of this spending will need to also be covered by an organic rise in tax income generated through growth. Today showed a flatline figure in economic growth meaning tax income will remain steady. A mechanism to improve growth in future months could be to reduce base rate, as this is proven to grow the services sector. It’s a delicate balancing act but reducing the base rate sooner rather than later is highly likely to stop the economic outlook becoming much worse.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The flat GDP data, coupled with the recent wage-growth and unemployment data, will cool the jets of the Monetary Policy Committee and make it probable that any further base rate reductions won't be happening anytime soon, so expect hold decisions in the months to come.
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Graham Cox
Director at Bridging Hub
No GDP growth for two straight months shows the UK economy is running on fumes. Consumers are clearly still feeling the aftershocks of the massive increase in interest rates, taxes and prices over the past couple of years. If this doesn't focus minds at the Bank of England nothing will. They must cut the base rate later this month to kickstart the economy.
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Mark Eaton
COO at April Mortgages
This flat GDP data highlights the uncertainty that continuously hangs over the economy, and is a reason why more and more borrowers are seeking the safe haven of longer term fixed rates. The past four years have been exceptionally volatile economically and we’re finding people are increasingly prioritising peace of mind long term over being exposed to the markets every two or three years. There is ample uncertainty in the economy so why add to it when you can protect yourself against it?