Just as the Bank was cutting rates, the UK government struck a limited tariff deal with the United States. This isn’t a full trade deal (despite some headlines), but it does make it easier to sell certain goods to the US - like cars, steel and aluminium.
It’s a step in the right direction, especially for manufacturers, but there are still a lot of loose ends. Many businesses won’t see immediate changes, and the finer details - especially around quotas and product rules - still need to be worked out.
Inflation and Growth
You might be wondering how all this affects you and your business day to day. Here’s the takeaway:
- Borrowing costs may ease a little. If you have loans or overdrafts tied to the base rate, the interest may drop slightly. But banks don’t always pass on the full cut straight away.
- Exporters may see new opportunities, particularly in manufacturing. If you’re selling to the US or considering it, this new tariff agreement could make a difference. But you may need to await the fine print - limits and paperwork still apply.
- Consumer confidence could improve. If the cost of borrowing continues to fall and inflation keeps steady, shoppers may feel a bit more comfortable spending again.
- Keep an eye on costs and planning. The economy is still unpredictable. While interest rates are lower, energy costs and trade uncertainties mean it's still worth budgeting cautiously.
A Balancing Act
The interest rate cut shows that the Bank believes inflation is under better control. However, they remain cautious about what will happen over the coming months.
So, while this may be a small bit of good news, the message is clear: we’re not out of the woods yet.