PRIME Minister Keir Starmer has appeared to take credit for the Bank of England base rate cut today – as experts hit back by saying “all he should take credit for is creating one hell of a mess in our economy”.
Sterling spiked surprisingly after today’s Bank of England rate decision which was a 5-4 vote in favour of a 0.25% cut from 4% to 3.75%.
This comes after yesterday’s larger-than-expected drop in UK inflation, from 3.6% to 3.2%.
Starmer tweeted in triumph at the decision, saying that it’s the sixth interest rate cut since Labour was elected – linking it to Labour’s policies that he says are “bringing costs down”.
Financial experts and small business owners have hit back at Starmer’s post on X.
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said: “Even a broken clock is right twice a day and all that Keir should take credit for is creating one hell of a mess in our economy.”
Economic literacy
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the Bank of England was “caught between a rock and a hard place”.
He continued: “Unlike Mr Starmer, the Bank of England (BoE) is not economically illiterate. With UK inflation still the highest in the G7 and 60% above target, nine times out of 10 the BoE would be looking to raise and not cut interest rates in keeping with standard economic theory.
“The trouble is the BoE is very aware that the £70bn of tax rises, new employment law and public sector pay awards doled out by Labour since coming to power in July 2024 have decimated the economy so they are between a rock and a hard place.
“They have cut rates by only 0.25% in an effort to save the economy from going into recession without stoking inflation.
“To stop inflation, they should have raised rates. To kickstart the economy, they should have cut by at least 0.5%. Sensibly, they have gone for a smaller cut to strike a balance between the two.”
Kundan Bhaduri, Entrepreneur at London-based The Kushman Group, said Labour had made sure that the UK economy was struggling.
Make-believe economics
He added: “The Bank cut rates because the economy is struggling, not because Labour’s policies are working. Bailey and his team are desperately trying to prevent recession while managing inflation that remains stubbornly above target.
“The real story behind today’s cut is simple. The Bank knows Labour’s £70 billion tax grab, employment law changes and public sector pay bonanza have kneecapped business confidence.
“They’re cutting rates not because inflation is under control, but because the alternative is watching the economy slide into recession on their watch.”
Pure fantasy
Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said Starmer’s tweet was “pure fantasy”.
She continued: “This is make-believe economics in Panto-land politics. The Prime Minister did not cut interest rates. The Bank of England did, because inflation eased and the economy weakened. Claiming credit is political dress up, not leadership.
“But pretending an independent central bank decision is a government win is pure fantasy. It would be more accurate if Sir Keir claimed responsibility for all the broken promises that led to the situation that prompted the BoE to step in.”
Scott Gallacher, Director at Leicester-based Rowley Turton, said: “Starmer, like all politicians, seems to be happy to take credit for any good news. However, I suspect that he’ll be more than happy, like all politicians, to blame markets or world events for any bad news.”
Photo by Ferenc Horvath on Unsplash
