{"id":325166,"date":"2025-08-07T12:30:13","date_gmt":"2025-08-07T12:30:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/325166\/"},"modified":"2025-08-07T12:30:13","modified_gmt":"2025-08-07T12:30:13","slug":"rachel-reeves-abandoned-as-boe-ducks-big-rate-decision-shes-doomed-personal-finance-finance","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/325166\/","title":{"rendered":"Rachel Reeves abandoned as BoE ducks big rate decision \u2013 she\u2019s doomed | Personal Finance | Finance"},"content":{"rendered":"

Yesterday I said only one man could save our Chancellor from the fiscal disaster she\u2019s trapped herself in<\/a> \u2013 Bank of England (BoE) governor Andrew Bailey. Her economic credibility is in tatters, the UK economy is stalling and the country is hurtling into a \u00a350billion black hole.<\/p>\n

Reeves desperately needed a superhero to burst through the smoke with a plan to help her escape. Bailey was the only one we had. But he didn\u2019t show up today. Not properly.<\/p>\n

The BoE\u2019s rate-setting monetary policy committee needed to take a chance and grant the nation a big juicy interest rate<\/a> cut of at least 0.50%.<\/p>\n

Lower borrowing costs would put money into the pockets of businesses and households, and cheer the country up. We’ve been miserable for too long, and that’s weighing on economic performance.<\/p>\n

So did the MPC act? Of course it didn’t. There’s nothing heroic about this bunch.<\/p>\n

They cut rates by the usual incremental 0.25%, shrinking bank rate to 4%. Incredibly, four out of the MPC’s nine members voted to hold rates at 4.25%. So we almost didn’t get a cut at all!<\/p>\n

Just one voted for a 0.5% cut to 3.75%. So unless something dramatic happens, we can’t expect a cut at next month’s meeting on September 18 either. At best, we’ll get one more this year, in November. Possibly none.<\/p>\n

Today was exactly the sort of small, steady move we\u2019ve come to expect (and fear) under Bailey. Once again, it\u2019s too little, too late.<\/p>\n

The Bank was too slow to hike when inflation first exploded in 2022. Now it\u2019s too slow to cut. The UK economy is a burning building, and Bailey turned up with a water pistol.<\/p>\n

What did we expect?<\/p>\n

Frankly, not much. Bailey was never going to swing in with the bold action the moment demanded. But part of me still hoped.<\/p>\n

Yes, inflation is still stubborn at 3.6%, well above the 2% target. The Bank is right to be cautious about that. Spiralling prices have wrecked household finances, shaken business confidence and helped boot the Tories<\/a> out of power. Reeves and Keir Starmer<\/a> felt the blowback, and their honeymoon ended before it began.<\/p>\n

But with growth flatlining, unemployment rising and Reeves boxed in by her own fiscal rules, the moment called for courage.<\/p>\n

A bigger cut might have jumpstarted lending, eased pressure on business and consumers, and shown the country that somebody, somewhere, was willing to lead.<\/p>\n

Instead, the BoE has done just enough to avoid criticism from its peers, but not nearly enough to change the game. We needed action. We got timidity.<\/p>\n

That leaves Reeves frighteningly exposed.<\/p>\n

The Chancellor is now completely alone in her fight to hold the economy together. Bailey isn\u2019t going to save her. Nobody is.<\/p>\n

She\u2019ll struggle to cut spending as the Labour left just wants to spend, spend, spend. She\u2019s boxed herself in with \u201cnon-negotiable\u201d fiscal rules, and already hiked taxes to a point where they generate less revenue, not more<\/a>.<\/p>\n

We are reaching the point of no return.<\/p>\n

Reeves will find it almost impossible to plug that \u00a350billion hole without a big hike to income tax or national insurance. That\u2019s now the only way to raise the sums needed to avert full-scale crisis.<\/p>\n

But that would breach a key Labour manifesto pledge not to hit \u201cworking people\u201d. Voters would never forgive Reeves. Or\u00a0Starmer<\/a>.<\/p>\n

Today’s meagre cut won\u2019t save the day. It\u2019s barely a gesture. We’re now another step closer to meltdown. So is Rachel Reeves<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Yesterday I said only one man could save our Chancellor from the fiscal disaster she\u2019s trapped herself in…\n","protected":false},"author":2,"featured_media":325167,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[936,51,1700,117376,478,619,16,117377,15],"class_list":{"0":"post-325166","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bank-of-england","9":"tag-business","10":"tag-economy","11":"tag-interest-rate-decision","12":"tag-interest-rates","13":"tag-rachel-reeves","14":"tag-uk","15":"tag-uk-economy-crisis","16":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114987494483420429","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/325166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=325166"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/325166\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/325167"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=325166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=325166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=325166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}