Interest rate path is tricky to navigate in tougher economy

Published

9 months ago

February 6, 2025

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Let’s start with the simple bit: interest rates have been cut – down by another quarter percentage point to 4.5%. But what happens next?

Not long ago, the answer was quite simple: the Bank of England would carry on cutting borrowing costs, one quarter point cut every three months, until they reached, say, 3.5%.

That, at least, was the expectation this time last year.

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But things have become more complex, more unpredictable in recent months.

Instead there are two paths ahead of us. One of them, let’s call it the high road, sees those borrowing costs being cut only gradually, down to 4% in a couple of years’ time.

Down the other road, the low road, the outlook is quite different: rates will be cut faster and more. They go down below 4%, perhaps as low as 3.5%, perhaps even lower.

The funny thing about today’s splurge of information and forecasts from the Bank of England is that it’s not entirely clear whether we’re on the high road or the low road anymore.

Now, strictly speaking, the forecasts and fan charts produced by the Bank’s staff tend towards the former, more conservative view – the two cuts.

But then look at the voting patterns on the monetary policy committee (MPC), where two members, Swati Dhingra and Catherine Mann just voted for a full half percentage point cut, and you’re left with a different impression. That rates will go lower, and quickly.

And in truth, that’s what often happens when the economy is weakening.

When gross domestic product, the best measure of economic output, is flatlining or shrinking, when inflation is low (especially when you look beyond the temporary bump caused by energy prices) – that’s usually precisely the time the Bank slashes rates with abandon.

And that’s precisely the situation the UK finds itself in at the moment.

But the problem is that a few things have complicated matters.

One is that the government decided to splurge more money in last October’s budget. That extra money sloshing around in the economy makes the Bank somewhat less willing to cut rates.

Another is that although the economy is weak, inflation is still high – indeed, the Bank actually raised its forecast for the consumer price index in today’s forecasts. Another is that the world economy has become a significantly more unstable place in recent months.

Germany is in recession. The US, under Donald Trump, is threatening tariffs on its nearest allies.

It’s not altogether clear whether the response to all this is lower interest rates.

Added to this, despite the chancellor’s best efforts, there is little evidence that her pro-growth policies are boosting economic growth – at least according to the Bank’s own forecasts.

These are tricky waters to navigate.

All of which helps explains why it’s no longer quite as clear as it once was what happens next.

My suspicion is that the Bank will end up cutting rates, probably more than those two cuts baked into its forecasts. But such forecasts are even more fraught than usual.

UK

Ex-England footballer Stuart Pearce’s son Harley dies in tractor crash

Published

4 hours ago

October 20, 2025

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Ex-England footballer Stuart Pearce's son Harley dies in tractor crash

The son of former England footballer Stuart Pearce has died in a crash, his family has said.

Harley Pearce, from Marlborough in Wiltshire, was driving a tractor near Witcombe, Gloucestershire, on Thursday, when he was involved in a collision, police said.

The 21-year-old farming worker died at the scene, on the A417 Old Birdlip Hill in Witcombe, around five miles from Gloucester.

No other vehicles were involved, Gloucestershire Constabulary said. Emergency services were called to the scene of the incident at about 2.30pm on October 16.

Harley Pearce was 21 and worked in farming, according to reports.

‘Our shining star’

In a tribute posted on Facebook, Harley sister, Chelsea Pearce, said the family was “truly shocked and utterly heartbroken at the loss of our cherished son and devoted brother, Harley”.

He was, the family said, was a soul “who left an unforgettable imprint on all who knew him”.

“He was a golden boy with an infectious smile, and this shocking tragedy will leave a huge hole in the hearts of those who were fortunate enough to have known him.”

He had “a quiet, understated strength and deep kindness”.

The family said they were “so proud of the young man he had become, exhibiting a wonderful work ethic and entrepreneurial spirit in the farming industry.

“He will always be our shining star. Rest in Peace, our beautiful son and brother. You will never, ever be forgotten.”

What have police said?

Harley ran his own company, Harley Pearce Agricultural Service, talkSPORT said.

Gloucestershire Constabulary said on Thursday: “The driver of the tractor, a man in his 20s and from Wiltshire, was pronounced dead at the scene.

“His next of kin are aware and being supported by specially trained officers.”

The force is appealing for any witnesses or anyone with dashcam footage to contact them.

‘Tragic news’

Harley’s father, Stuart Pearce, played 78 times for England and was part of the Three Lions squads which reached the semi-finals of the 1990 World Cup and Euro 96, the FA said on its website.

He was later the head coach of the England Under-21s.

During a long club career, he made more than 400 appearances for Nottingham Forest, many of them as captain, during a 12-year spell at the City Ground.

He later managed the club, as well as another former club, Manchester City.

Pearce currently works as a pundit on talkSPORT, which said on its website that Harley and Chelsea were the two children he had with his ex-wife Liz.

Presenter Jim White said during a broadcast on Monday that “everybody here on this show and at talkSPORT sends our heartfelt condolences to the family of Stuart Pearce after that tragic news we’ve just heard”.

Several of the clubs he played for posted tributes on X, including Forest, who said they were “deeply saddened”.

The club said: “The thoughts of everyone connected with Nottingham Forest are with Stuart and his family at this truly difficult time.”

West Ham United said: “We are saddened to hear of Harley Pearce’s passing.

“Everyone at the Club sends their deepest condolences to Stuart and his family at this tragic time.”

Manchester City said: “Everyone at Manchester City sends their love and thoughts to Stuart and his family at this very difficult time.”

UK

Inquiry launched into ‘repeated’ maternity failings at Leeds NHS trust

Published

4 hours ago

October 20, 2025

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Inquiry launched into 'repeated' maternity failings at Leeds NHS trust

After years of campaigning, bereaved families in Leeds have been told they will get a fully independent inquiry into local maternity services.

The inquiry was announced by Health Secretary Wes Streeting who said he was “shocked” that the families faced “repeated maternity failures… made worse by the unacceptable response of the trust”.

Despite running one of the largest teaching hospitals in Europe, Leeds Teaching Hospitals NHS Trust “remains an outlier on perinatal mortality”, according to official data.

In June, the Care Quality Commission downgraded maternity services at the trust to “inadequate”, describing serious risks to women and babies and a deep-rooted “blame culture” that left staff afraid to speak up.

Grieving families have welcomed the launch of the inquiry.

In 2023, an inquest concluded Fiona Winser-Ramm and Daniel Ramm’s first baby, Aliona, died in 2020 as a result of neglect from medical staff.

“When after our daughter died, we were told that they had never seen anything like it before. And we believed it initially,” said Ms Winser-Ramm.

“We believed that we were the first people, the only people that this had ever happened to. And in the depths of our despair and grief, we needed to find other people that understood this, that were the same as us,” she added.

Mr Ramm said the inquiry had been “a long time coming”.

“We have, as a group of families, spent years trying to essentially expose what the problems have been at least that we’ve known have existed all along,” he said.

Lauren Caulfield’s baby Grace was stillborn in 2022 and an investigation found failings in her care.

“We shouldn’t… as bereaved, grieving parents have to do this [campaigning] for so many years. [It’s] quite a relief to know that, you know, we don’t have to keep fighting,” she said.

Mr Streeting said: “This stark contradiction between scale and safety standards is precisely why I’m taking this exceptional step to order an urgent inquiry in Leeds.

“We have to give the families the honesty and accountability they deserve and end the normalisation of deaths of women and babies in maternity units.

“These are people who, at a moment of great vulnerability, placed their lives and the lives of their unborn children in the hands of others – and instead of being supported and cared for, found themselves victims.”

Brendan Brown, chief executive of Leeds Teaching Hospitals NHS Trust, said: “I want to start by offering the families an unreserved apology, not only for their experience, but also for the fight that they’ve had in raising these concerns.

“And I want to assure them of our commitment to engage with the independent inquiry openly, honestly and transparently.”

The families are waiting for the terms of reference of the investigation to be confirmed, but feel the police should be involved.

They also called for it to be chaired by midwife Donna Ockenden, who is heading the independent review of maternity services at the Nottingham University Hospitals NHS Trust.

Leeds now joins a growing list: Morecambe Bay, Shrewsbury, East Kent, and the ongoing Nottingham inquiry, all uncovering shocking failures in maternity care across England.

UK

King visits scene of fatal Manchester synagogue attack

Published

4 hours ago

October 20, 2025

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King visits scene of fatal Manchester synagogue attack

The King has visited the scene of a fatal attack at a synagogue in Manchester.

The monarch was greeted by Rabbi Daniel Walker when he arrived at the Heaton Park Hebrew Congregation Synagogue.

He spent a few minutes at an outside memorial area next to the synagogue, where flowers and messages have been left by those paying their respects.

It was the King’s first official engagement since Prince Andrew‘s decision to relinquish his titles under intense public scrutiny following allegations he sexually abused Virginia Giuffre. The prince vehemently denies the allegations.

Andrew also faces the Metropolitan Police looking into reports he asked an officer to help with an attempted smear campaign against Ms Giuffre.

During the attack at the Manchester synagogue on the Jewish holiday of Yom Kippur, father-of-three Melvin Cravitz, 66, was killed, along with Adrian Daulby.

Mr Daulby, 53, was believed to have been inadvertently shot by police as he ran to block the synagogue doors to stop the attacker getting inside to continue his knife rampage.

Attacker Jihad al Shamie, 35, called 999 during his deadly rampage, pledging allegiance to the so-called Islamic State terror group.

He drove his car at Jews gathering at the Heaton Park Hebrew Synagogue for the holy day of Yom Kippur, then attacked others with a knife and tried to storm the synagogue, wearing a fake suicide belt, before armed police shot him dead.

Last week, Yoni Finlay, who is believed to have been hit by a police bullet during the attack and underwent seven hours of surgery, was discharged from hospital.

He reportedly helped barricade the doors at the synagogue.

Greater Manchester Police said two other men injured in the attack, a security guard who was hurt when the attacker rammed his car outside the synagogue and a volunteer who was stabbed, remain in stable conditions.