Thinktank Probe Urges Bank of England Rate Cuts for Growth

Published: 16 February 2026. The English Chronicle Desk. The English Chronicle Online.

The Trades Union Congress has called for the Bank of England to reduce interest rates, warning that stagnant consumer spending is dragging the UK economy behind its international peers. This thinktank probe highlights that households struggling with high borrowing costs are unable to sustain growth, while other industrialised nations continue to see rising consumer demand. The TUC emphasised that immediate action on rates could help revive economic momentum and restore confidence among shoppers and businesses alike.

Paul Nowak, the TUC’s general secretary, insisted that the Bank’s monetary policy should prioritise growth over inflation fears. He said last year’s cautious approach left households squeezed and slowed recovery, urging a rapid sequence of cuts to stimulate spending. “Lower interest rates would directly put money into people’s pockets, supporting high streets and local services while boosting confidence across the economy,” Nowak explained.

Official figures confirm weak performance, with GDP expanding only 0.1% in the final quarter of 2025. According to the TUC, high borrowing costs with the Bank’s base rate at 3.75% have contributed to this sluggish growth. Their analysis shows that UK consumer demand has grown more slowly over the past three years than in 32 of 37 industrialised countries in the Organisation for Economic Co-operation and Development, many of which have kept inflation low.

Consumer spending has historically accounted for around two-thirds of the UK’s economic growth since 2008, but the TUC notes that in the past two years it contributed almost nothing. They argue that prioritising household affordability and high street support should now outweigh concerns about wage-driven inflation. The thinktank probe asserts that without action, growth will continue to lag while international competitors pull ahead.

The Bank of England’s monetary policy committee narrowly voted 5-4 to maintain rates this month, leaving markets uncertain. Economists expect a potential cut at the March meeting, although the scale of reductions may not mirror the aggressive moves seen last year. Huw Pill, the Bank’s chief economist, recently described current rates as “a little bit too low” and estimated underlying inflation at roughly 2.5%, excluding policy-driven price adjustments.

Chancellor Rachel Reeves has indicated support for growth-focused measures, particularly through her November budget. By lowering energy bills from April and encouraging investment-friendly policies, she aims to balance inflation management with economic expansion. However, businesses have expressed concerns that previous increases to employer national insurance and the national minimum wage have pushed prices upward, complicating inflation control efforts.

Following recent Labour party turbulence, Reeves is determined to signal stability and a commitment to her growth strategy. This includes targeted infrastructure investment, planning reforms, and regulatory changes designed to foster business confidence. She will provide a Commons statement on 3 March updating the public on the Office for Budget Responsibility’s latest forecasts, followed by a spring speech detailing her “securonomics” approach, which blends industrial policy with supply-side measures.

The TUC’s call for a proactive interest rate reduction underscores the ongoing tension between stimulating growth and managing inflation. Analysts suggest that any shifts in Labour’s economic policies, particularly during leadership discussions, could influence the direction of government borrowing and bond markets. The thinktank probe serves as a reminder that consumer spending is central to the UK’s recovery and that decisive monetary policy action is required.

Market commentators also note that slower growth could undermine the Bank’s broader objectives, with persistent low consumer demand leaving households financially constrained and businesses hesitant to invest. The TUC argues that immediate intervention through rate cuts could rejuvenate consumer confidence, enhance retail activity, and support small and medium enterprises.

In summary, the UK economy faces a critical juncture where household affordability and consumer spending are increasingly pivotal. The Trades Union Congress’s thinktank probe advocates for decisive action from the Bank of England, suggesting that prioritising growth over inflation fears will strengthen the economy in the year ahead. By following this advice, policymakers could see higher domestic demand, greater confidence among investors, and a more resilient economic outlook.

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