The latest data already points to an economy sitting on a knife edge, with unemployment up, employment down and company inventories and vacancies all nose diving. At least half of the effects from past interest rate increases since 2021 are still yet to feed through to families and firms and will now leave their mark on the economy in the coming months.
Responding to the Bank of England's decision to leave interest rates unchanged, JRF Chief Economist Alfie Stirling said:
“The first pause on interest rates in more than a year and a half is welcome news. Higher interest rates don't prevent the UK from becoming poorer, they merely reflect a choice over how and where the economic hit is felt. But it is a balancing act, which if misjudged, risks converting a medium-term price shock into a permanent loss of jobs and income for those who can least afford it.
“Either way, government can and should be doing much more to protect living standards both now and for the future. This includes rebuilding the UK's income safety net so that it reflects the actual cost of essentials and investing in ways to reduce the UK's future exposure to price increases across the economic system, including through stronger public services, housing market reform and greater energy efficiency and security.”