The Bank should cut rates by 25 basis points today to prevent stagnation becoming entrenched, says Damian Pudner

On Thursday, the Bank of England will announce its latest decision on interest rates. Less than three weeks later, on 26 November, the Chancellor will deliver her second tax-raising Budget, despite promising that last year’s would be a “once-in-a-parliament” event. Between them, the UK’s two most powerful economic players risk tightening simultaneously and pushing an already fragile economy over the edge.

Bank Rate has been held at four per cent since August, even as inflation has fallen faster than the Bank expected, dropping to 3.8 per cent in September, and is expected to drift lower over the coming months. Growth remains abysmal. GDP expanded by just 0.3 per cent in the three months to August, while business investment fell again in the second quarter and job vacancies continue to decline, down 13.8 per cent in the three months to September and remain 9.8 per cent below pre-Covid levels. Unemployment has climbed to a four-year high of 4.8 per cent and private-sector wage growth – a figure closely watched by the Bank – has cooled to 4.4 per cent with further moderation likely.

Money markets currently price around a one-in-three chance of a rate........

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