Written by: Keith Tully
Date: Friday 27th October, 2017
The latest official figures on growth within the UK economy showed faster-than-expected expansion in the third quarter and have raised expectations that the Bank of England will now opt to increase interest rates in the near future.
Many experts are now tipping the bank to increase its base rate of interest in November for the first time since 2007 in a move that would add to the cost of borrowing for millions of consumers and businesses across the country.
The Office for National Statistics (ONS) has reported that the UK’s GDP grew by 0.4 per cent in the third quarter, which represents a slight increase on the comparative figure for the second quarter of the year and improvement on the 0.3 per cent that most economists had been expecting to see.
A near-term rise in interest rates could be an important consequence of that better-than-expected nationwide GDP performance because it may give the Bank of England scope to raise borrowing costs as a means of dampening inflation without derailing economic growth.
According to the ONS, the headline rate of inflation across the country stood at 2.8 per cent in September 2017 and has been consistently above the Bank of England’s target figure of 2 per cent for much of this year.
Prior to the Credit Crunch of a decade ago, the Bank of England had its base rate of interest set at over 5 per cent but gradually lowered it as the Financial Crisis unfolded in 2008.
By March 2009, the base rate was as low as 0.5 per cent, where it remained for more than seven years until rates were trimmed down to their current level of 0.25 per cent in August 2016.
The Monetary Policy Committee, which decides what should happen to interest rates on behalf of the Bank is scheduled to meet in early November.
It is now widely expected that the committee’s decision will be to vote in favour of the first rise in the cost of borrowing this decade.
Commenting on the situation, Ruth Gregory from the consultancy firm Capital Economics said this week that the ONS’ GDP growth figures “probably sealed the deal on an interest rate hike next week”.
7th November 2017 Sales of non-food products among retailers across the UK showed a record low level of growth in the year to October 2017.
31st October 2017 As many as one in five restaurant businesses in the UK are exhibiting signs which indicate that they could be at risk of becoming insolvent.
27th October 2017 British businesses are losing out financially to the tune of tens of billions of pounds as a result of mental health issues among the members of their workforces.
27th October 2017 The latest official figures on growth within the UK economy showed faster-than-expected expansion in the third quarter and have raised expectations that the Bank of England will now opt to increase in
25th October 2017 A growing number of British companies are showing signs of being in financial distress, according to a new set of figures on the subject.
Every day we help companies just like yours turn things around against seemingly impossible odds, regardless of your situation we can help. Find your nearest office today.