{"id":88875,"date":"2026-01-02T08:13:50","date_gmt":"2026-01-02T08:13:50","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=88875"},"modified":"2026-01-02T08:13:50","modified_gmt":"2026-01-02T08:13:50","slug":"will-the-bank-of-england-base-rate-tumble-in-2026","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2026\/01\/02\/will-the-bank-of-england-base-rate-tumble-in-2026\/","title":{"rendered":"Will the Bank of England base rate tumble in 2026?"},"content":{"rendered":"

This comes from The Telegraph this morning<\/a>:<\/p>\n

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The Bank of England will slash interest rates to their lowest level in more than three years as Britain battles an\u00a0unemployment crisis, a Swiss lender has claimed.<\/p>\n

Rates will fall from the\u00a0present level of 3.75pc\u00a0to 2.75pc after the summer, according to Lombard Odier. The figure would be the Bank Rate\u2019s lowest point since November 2022.<\/p><\/blockquote>\n

The suggestion is that this will be driven by \"ructions in the employment market\"\u00a0because of a \u201ccollapse in job vacancies\u00a0to below pre-pandemic levels and a rising unemployment rate\u201d.<\/p>\n

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As the Telegraph notes:<\/div>\n<\/div>\n

The jobs market has been worsening, with\u00a0unemployment standing above 5pc\u00a0in the three months to October, according to the Office for National Statistics (ONS).<\/p><\/blockquote>\n

They added:<\/p>\n

Meanwhile, private sector pay growth slumped to 3.9pc in the three months to October, its weakest level since early 2021.<\/p><\/blockquote>\n<\/div>\n<\/div>\n

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This is the data:<\/p>\n

\"\"<\/p>\n

The suggestion does have evidence to back it. The result would be a bank base rate close to neutral. In other words, it would be running at around the rate of inflation, assuming that continues its current downward trend.<\/p>\n

Is this possible? Not in the opinion of the Bank of England. They predict nothing less than. 3.5% next year, but they ignore the very real risk of a recession. So, yes, I think this is plausible, and much more so than anything the Bank of England suggests, especially if, as I suspect, AI fails to deliver for stock markets and does hike inflation, as I note is possible this morning<\/a>.<\/p>\n

2026 is not, in other words, going to be an easy ride as antisocial neoliberalism continues to hold us in its death throes.<\/p>\n

\n<\/div>\n<\/div>\n

Comments\u00a0<\/b><\/p>\n

When commenting, please take note of this blog\u2019s comment policy,\u00a0which is available here<\/a>. Contravening this policy will result in comments being deleted before or after initial publication at the editor\u2019s sole discretion and without explanation being required or offered.<\/p>\n","protected":false},"excerpt":{"rendered":"

This comes from The Telegraph this morning: The Bank of England will slash interest rates to their lowest level in more than three years as
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