How many more times will the Bank of England rescue Rachel Reeves? | Richard Partington
In the economic gloom of Labour’s first year in power, Rachel Reeves has had a reliable shred of comfort to cling to: five times since the general election, the Bank of England has cut interest rates.This week, in all likelihood, the chancellor will get a sixth to shout about, as Threadneedle Street prepares to reduce borrowing costs in an early Christmas present that will be seized upon by the Treasury.The view in the City is that a festive cut on Thursday is odds-on.After last week’s disappointing October growth figures, the jobs market and consumer prices data due out on Tuesday and Wednesday – before the rates decision – are expected to confirm that inflationary pressures in the UK economy are fading.But while a cut will be good news for businesses, mortgage borrowers and the beleaguered occupants of Downing Street, attention will quickly shift to the prospects for 2026.
How many more times could the central bank come to the chancellor’s rescue? Here things are a bit more complicated.That Britain’s economy is in the doldrums should hardly come as a surprise.Continual tax speculation has sapped business confidence and household spending, while Reeves’s increase in employer national insurance contributions has played a part in UK unemployment hitting the highest levels since 2021, during the height of the Covid pandemic.Celebrating a rate cut, in this context, is akin to an arsonist cheering the arrival of the fire brigade.There are, though, factors beyond Reeves’s control.
Not least the dire state Britain’s economy was left in by the Conservative party, and Donald Trump’s damaging tariff war.The Bank has also played a role.Borrowers have been singed by three years of punitively high interest rates set in deeply restrictive territory.The policy is the central banker’s main tool for combating inflation as it chokes off demand by incentivising saving and discouraging spending.After the inflation shock triggered by Russia’s invasion of Ukraine, Threadneedle Street argues it had little choice but to act.
But the growth trade-off is clear.Even after successive rate cuts, the Bank’s own analysis shows the base rate continues to subtract about 2% from the level of GDP.Anyone who has remortgaged their home since 2022 knows this first-hand.And despite progress since the Liz Truss debacle, millions of borrowers still face substantially higher loan repayments – and will continue to do so for years to come.That is hardly going to light a match under the UK’s consumption-driven economy.
This week the Bank’s policymakers are expected to be split on the appropriate way forward.Some on the nine-strong monetary policy committee (MPC) recognise the damage rates are doing at a time when inflation is cooling.Others think a tough approach is warranted to snuff out price rises.Andrew Bailey is expected to hold the casting vote.The Bank’s governor has suggested he thinks inflation is more likely to fall back than stick at stubbornly high levels – paving the way for a quarter-point cut on Thursday.
Next year, however, it is tougher to anticipate how the MPC will respond.Policymakers are likely to remain divided on the inflation outlook and the “neutral” position for rates – the point at which they are neither stoking nor hosing down economic activity.Reeves’s budget measures – including relief on energy bills, fuel duty, rail fares and prescription charges – could support the case for deeper cuts.The Bank predicts the policies could slash headline inflation by up to 0.5 percentage points by the middle of 2026.
All of this was part of a deliberate strategy inside the Treasury in the hope voters give credit to Labour for lower mortgage costs.Government borrowing costs could also fall back, unpicking some of the factors behind the recent years of fiscal drama in Westminster.However, many economists warn the reprieve could be temporary.Much of the disinflationary impulse will be in energy prices, and do little to help Britain’s issues with sticky service sector inflation.Other areas of government policy could also push in the wrong direction.
Business leaders warn a higher minimum wage, business rates, and other tax increases will drive up their costs – resulting in companies putting up prices for their customers, in turn stoking inflation.That said, some of the factors the hawks are betting on look shaky.Business costs are rising but hardly at breakneck speed.At 4.1%, the rise in the minimum wage from April is significantly below that in previous years – particularly when set against the context of 2022, when Jeremy Hunt ignored misplaced warnings about a wage-price spiral and increased the legal pay floor by 9.
7% from April 2023.By the time we get to spring, there should be signs that inflation is undershooting, and wage growth is slowing.The economy will probably still be lacking momentum.Household confidence may be picking up, and companies will probably lack the pricing power to push through yet more increases.All of this means Reeves could see more rate cuts from the Bank.
Roll up! Philip Khoury’s recipe for pistachio yule log | The sweet spot
This rich and moreish (and plant-based) yule log is a Lebanese Christmas favourite that harks back to the country’s French colonial pastI love a yule log, also known as a bûche de Noël. It’s a remnant from the time when Lebanon was a French colony, which lingers to the modern day, and is popular in Lebanese bakeries and patisseries over the Christmas period, often decorated with small figurines, plastic holly leaves and festive messages. Those decorations, and the trompe-l’oeil nature of this treat, enchanted me as a child, and I wanted to bring back some of that enchantment with this take on a woodland yule log.Prep 10 min Cook 3 hr 15 minChill 7 hr Serves 8–10For the chocolate chantilly mousse190ml plant-based milk, 100ml of it well chilled 120g dark chocolate (at least 65% cocoa solids), chopped For the chocolate ganache200ml plant-based milk, 100ml of it well chilled 50g muscovado sugar, or dark brown sugar150g dark chocolate (at least 65% cocoa solids), chopped For the pistachio praline200g shelled pistachios 100g icing sugar¼ tsp fine sea saltFor the aquafaba meringue mushrooms 75ml aquafaba¼ tsp cream of tartar150g caster sugarUnsweetened cocoa powder, for dustingMelted dark chocolate, for dipping For the pistachio sponge60g shelled pistachiosVegetable oil, for greasing 105g plain flour100g caster sugar¾ tsp baking powder¼ tsp bicarbonate of soda¼ tsp fine sea salt135ml soya milk¾ tsp vanilla extract1½ tsp apple cider vinegarTo decorate350g amarena cherries, or tinned cherries in syrup1 sprig dill Icing sugar, for dustingFor the mousse, heat 90ml milk in a saucepan on a medium heat until it reaches a gentle simmer. Meanwhile, put the chocolate in a heatproof bowl, pour in the hot milk and blend with a handheld blender until completely smooth
Ho, ho, Hamburg: bringing the flavours of a true German Christmas market home
From glühwein to lebkuchen, bratwurst to stollen, recreating the delicacies I sampled in the city’s festive markets is wholly achievable. Plus, a new digital cookbook for a good cause Sign up here for our weekly food newsletter, FeastWithout wanting to sound tediously Scrooge-like, the German-style markets that have become seasonal fixtures in many British cities over the last few decades never make me feel particularly festive. What’s remotely Christmassy – or German – about Dubai-chocolate churros and Korean fried chicken, I grumble as I drag the dog (who enjoys all such things) around their perimeters.Hamburg’s markets, however, which I was myself dragged around last weekend, are a very different story. For a start, the city has many of them, mainly fairly small – and some, such as the “erotic Christmas market” in St Pauli, with a particular theme
Christmas gift ideas for drinks lovers, from champagne to canned cocktails
Don’t get pulled in by silly gadgets: buy presents you’d be happy to receive yourselfThe Guardian’s journalism is independent. We will earn a commission if you buy something through an affiliate link. Learn more.Alcohol is an unavoidable part of a festive spread (for more advice on which wines, beers and other drinks I like for each and every occasion, take a look at last week’s Christmas drinks guide), but, sometimes, a drink deserves a place under the tree as well as around it – especially if it’s an easy win for a drinks devotee for whom you need to buy a prezzie.The Guardian’s journalism is independent
Nine bring-a-plate ideas for Christmas drinks, barbecues and dinner parties this summer – recipes
Like nibblies, the concept of bringing a plate to a social event or a host’s home can be deeply confusing across cultures and generations. Are you carting canapes? Are you slinging salad? Are you delivering dessert? If we’ve learned anything from the tragedy of Romeo and Juliet, it’s that communication is key. So if you’re unsure about what your host expects, just ask.Below are nine summer-friendly recipes to suit various bring-a-plate scenarios: one-bite snacks that go with cocktails, salads to bring to barbecues and make-ahead dessert for dinner parties, arranged in each category from easiest to most ambitious.And if time is seriously short, you could throw together a pleasingly arranged antipasto-ish plate comprised of Guardian Australia’s top supermarket taste test products: crackers, feta, salami and pickles
How to use a spent tea bag to make a boozy, fruity treat – recipe | Waste not
Save a used teabag to flavour dried fruit, then just add whisky for a boozy festive treatA jar of tea-soaked prunes with a cheeky splash of whisky is the gift you never knew you needed. Sticky, sweet and complex, these boozy treats are wonderful spooned over rice pudding, porridge, yoghurt, ice-cream or even panna cotta.Don’t waste a fresh tea bag, though – enjoy a cuppa first, then use the spent one to infuse the prunes overnight. Earl grey adds fragrant, citrus notes, builders’ tea gives a malty depth, lapsang souchong brings smokiness, and chamomile or rooibos offer softer, floral tones. It’s also worth experimenting with other dried fruits beyond prunes: apricots, figs and/or dates all work beautifully, too
Christmas food gifts: Gurdeep Loyal’s recipes for Mexican-spiced brittle and savoury pinwheels
Edible Christmas gifts are a great excuse to get experimental with global flavours. For spice lovers, this moreish Mexican brittle, which is inspired by salsa macha (a delicious chilli-crunch), is sweet, salty, smoky, crunchy and has hints of anise. Then, for savoury lovers, some cheesy pinwheel cookies enlivened with XO sauce. XO is a deeply umami condiment from Hong Kong made from dried seafood, salty ham, chilli and spices. Paired with tangy manchego, it adds a funky kick to these crumbly biscuits
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