Narrow Bank of England vote puts end of interest rate-cutting cycle in sight
Rachel Reeves has reason to be cheerful,After last month’s budget, the Bank of England cutting interest rates will come as an early Christmas tonic for the chancellor by lifting some of the pressure on hard-pressed borrowers,The City had been heavily betting on a sixth cut since August last year, and Threadneedle Street delivered with a reduction in the base rate from 4% to 3,75%,The question, however, is how much further the Bank can go to bring to an end its current easing cycle, after a painful hump in inflation over the past year.
For borrowers, Thursday’s decision suggests the endpoint is coming into focus – spelled out succinctly by the Bank’s governor, Andrew Bailey,“We still think rates are on a gradual downward path,” he said,“But with every cut we make, how much further we go becomes a closer call,”Some of this reflects deep divisions in the Bank’s monetary policy committee (MPC) over the UK’s inflation prospects,Even though five members on the nine-strong panel, including Bailey, backed a Christmas cut, the four in the minority already reckon the endpoint may have arrived.
Heading into Thursday, a majority call from the MPC had been all but guaranteed after figures showing a pronounced slowdown in headline inflation to 3.2% in November were released on Wednesday.At the same time, the economy is struggling for growth momentum and unemployment is rising, removing some of the kindling required for inflation to reignite next year.Given these bleak winter conditions, the Bank believes economic growth probably flatlined in the fourth quarter.For some members of the MPC, the weakness in the economy and widening slack in the jobs market are enough to justify further rate cuts.
Last month’s autumn budget could help further justify the case,Threadneedle Street reckons the chancellor’s measures in last month’s budget – including relief on energy bills, rail fares and prescription charges – will cut headline inflation by 0,5 percentage points from the second quarter of next year,This should be enough to get the rate close to the Bank’s 2% target a year earlier than previously anticipated,In the views of some on the MPC, this could help to ensure inflation sticks close to the government-set target thereafter, by convincing businesses and households to bargain for wages and set prices in the knowledge that the headline rate is close to 2%.
For others on the MPC, however, there are still worrying signs of problems bubbling underneath the surface that could risk inflation drifting higher,Central to this is a concern that wage growth remains much higher than would normally be considered usual given the weakness in the economy and rising levels of unemployment,The Bank’s network of agents estimate that annual pay settlements next year will probably be in the region of 3,5% – significantly higher than levels that are consistent with keeping inflation near to the 2% target,And while Reeves’s budget measures are expected to subtract from headline inflation in 2026, the MPC thinks the government will probably add to price growth in 2027 and 2028 by between 0.
1 and 0.2 percentage points.This would chime with business leaders’ warnings that adding to employment costs – with a higher living wage, employment rights, and planned taxes on pensions – could force companies to increase prices in response.For Reeves, the Bank’s six rate cuts have provided Labour with ammunition to defend its record.In the short term, that story remains intact.
The hope in Downing Street will be that whacking inflation down in 2026 could help prevent the headline rate sticking at elevated levels.Most economists anticipate at least another cut in interest rates next year as a result.Weaker growth, rising unemployment, and evidence of a further inflation slowdowncould put more on the table.But the endpoint is getting closer.
MPs to question Vodafone on ‘unjust’ treatment of store franchise owners
Vodafone executives will next month meet MPs scrutinising the company’s treatment of scores of business owners running its stores.The move follows claims reported by the Guardian last week of suicide and attempted suicide by people who had agreed deals to run outlets for the £18bn telecoms company. The report led to suggestions that the government might consider new laws to correct the power imbalance in franchise agreements.A group of 62 former Vodafone franchisees brought a high court claim in 2024, alleging the company “unjustly enriched” itself in 2020 by slashing sales commissions.The court papers alleged that Vodafone acted in “bad faith” by unilaterally cutting fees to its franchisees; imposed fines of thousands of pounds for seemingly minor administrative errors; and then cajoled them into taking out loans and government grants to keep their businesses afloat
BP opts for culture shock with new CEO appointment, but the timing is odd
Here we go again. Just when you thought BP was trying to generate less drama, the new chair has decided a new chief executive is needed. Say goodbye to Murray Auchincloss, who junked the green-ish transition strategy of his predecessor as recently as February. Meg O’Neill, the American boss of the Australian group Woodside Energy, becomes BP’s first outside hire as chief executive.At face value, a new appointment should not be an outright surprise
TikTok signs Trump-backed deal to sell US entity to American investors
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Facebook tests charging users to share links in potential blow for news outlets
Facebook is testing a system that charges users for sharing web links, in a move that could prove to be a further blow to news outlets and other publishers.Meta, the social media platform’s owner, said it is carrying out a “limited test” in which those without a paid Meta Verified subscription, costing at least £9.99 a month, can only post two external links a month.The test appears to involve a subset of Facebook pages and user profiles on Professional Mode, which includes features used by content creators to monetise their posts.News organisations are not included in the test
Australia v England: Ashes third Test, day three – live
27th over: Australia 104-2 (Head 58, Khawaja 22) Carse continues and is back to digging the ball in short too often. A curious tactic when England need wickets to stay in the game – and series. Head picks up a single on the offside as Joe Root spins the arms.As this innings begins to show all the signs of drifting away from England, Edward poses an interesting question from Germany: “5C here in Mannheim and missing the Australian heat. Quick question: is Australia the worst test team in reviewing decisions both in terms of success rate and when deciding to review?”Without having the stats around that to hand, the eye test (and fading memory) certainly suggests there is plenty of room for improvement
Rory McIlroy named BBC Sports Personality of the Year 2025 – as it happened
Time to sign off, I’ll leave you with Sean Ingle’s report. Thanks for joining me.Sports Personality of the Year: Rory McIlroyRunners-up: Ellie Kildunne, Lando NorrisTeam of the Year: Europe’s Ryder Cup teamCoach of the Year: Sarina WiegmanYoung Sports Personality: Michelle AgyemangWorld Sport Star: Armand DuplantisLifetime Achievement Award: Thierry HenryHelen Rollason Award: Sergio Aguiar and David StancombeIf you’re new here, you can get the best of our coverage delivered to your inbox every Sunday. Sign up below:A reminder of Rory McIlroy’s golden year:And with that, the ticker tape flies and Balding, Logan and Scott bid us farewell. That was a very watchable ceremony with plenty of insights – it was also emotional, even fraught, at times
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