UK Households Face £11 Billion Shortfall Despite Bank of England Rate Cuts

British households remain £11 billion ($14.5 billion) worse off annually despite four consecutive rate cuts by the Bank of England since July 2023. The Monetary Policy Committee's reduction of the benchmark rate from 5.25% has failed to alleviate financial pressures, with savers earning less on deposits and homeowners locked into peak-rate mortgages.

Consumer spending, accounting for 60% of the UK economy, continues to stagnate as households prioritize saving over expenditure. The GfK savings index reached its highest level since 2007 in July, reflecting widespread caution ahead of anticipated autumn tax hikes.

Policymakers face mounting challenges in stimulating economic growth while managing inflation. The Bank of England is expected to implement another 25 basis point cut this Thursday, potentially lowering the main rate to 4% as labor market conditions soften.