Closing post
Time to recap:
Bank of England policymakers have cut interest rates by a quarter point to 4.25% to cushion the UK economy against the impact of Donald Trump’s trade war.
The widely expected move from the Bank’s monetary policy committee (MPC), its fourth cut since last August, also carried a warning that the UK economy would slow by a further 0.3% over the next three years in addition to dramatic cuts to its forecasts made earlier this year.
In a blow to the chancellor, Rachel Reeves, the MPC said a combination of uncertainty surrounding the impact of US trade policy and clouds hanging over the UK economy meant growth would be almost stagnant for the rest of the year.
Economic growth “is judged to have slowed and is expected to remain subdued in the near term”, the Bank said.
In a split vote, with two of the nine-member MPC voting for a bigger 0.5 percentage point cut and two voting to hold at the current 4.5% level, the Bank signalled a high degree of caution about the number of interest rate cuts over the rest of the year.
Thursday’s interest rate cut to 4.25% is the fourth in a run of reductions that kicked off last August. It represents a fillip for Rachel Reeves, who will hope it helps revive the feelgood factor for gloomy British consumers.
The Bank of England’s nine-member monetary policy committee (MPC) has passed judgment on the impact of Donald Trump’s trade war for the UK – and expects modestly weaker growth and inflation to be the result.
Lower global energy prices as markets anticipate weaker demand, and cheaper Chinese imports, are likely to bear down on costs, the MPC has judged.
And the trade war is likely to shave 0.3% off (already weak) growth in three years’ time, reassuring them that they have a little more space to cut rates.
Friday night post-work drinks vanishing, Lords hear
The traditional Friday night post-work drink has all but disappeared from UK city centres since the pandemic as a result of hybrid working, a House of Lords committee has heard.
“In London’s instance, the Friday night drink hasn’t gone away, it has just shifted to a Thursday,” Paul Swinney, director of policy and research at thinktank Centre for Cities, told the Lords’ home-based working committee.
“When we looked at other large cities … it appeared from the data that we have, that the post-work drink has reduced.”
Swinney cited recent Centre for Cities research that found increased home working had changed the spending habits of the nation’s commuters significantly, which could pose a challenge for service businesses that depend on footfall from office workers, such as hospitality venues, sandwich bars and coffee shops.
“In London it’s seems like it’s potentially a reallocation during the working week, but in other large cities hybrid working seems to have led to a reduction of weekday spending by workers in the city centre.”
However, Centre for Cities’ research has found that workers outside of the capital – in cities including Birmingham, Manchester, Nottingham and Liverpool – are more likely to travel into their nearest city centre during their leisure time at the weekend.
The Lords’ committee has launched an inquiry into the impact of the post-Covid increase in remote and hybrid working on employers and their employees, and the wider impact on the British economy.
Hybrid working – splitting time between the office and home or another remote location - was the standard pattern for more than a quarter (28%) of working adults in Great Britain in late 2024, according to the Office for National Statistics (ONS).
While some large employers have toughened up their office attendance policies in recent months, many workers tend to visit their workplace on the core midweek days of Tuesday, Wednesday and Thursday, and may bookend the week at home.
“Commuting trips are lower Mondays and Fridays especially,” Christina Calderato, director of strategy at Transport for London (TfL), told the committee while Thursday is the busiest day of the week on the London underground.
Tube and bus usage is at about 90% of pre-pandemic levels, Calderato said, with bus usage more consistent across the week.
She added:
“I think that speaks to the fact that people who are reliant on the bus are less able to change some of their patterns of trips than other workers.”
Friday is also the quietest day of the week on Manchester’s tram network, according to Daniel Vaughan, chief network officer at Transport for Greater Manchester, although more people travel for leisure reasons on Friday evenings.
The reduction in commuting since the pandemic and the ability of some workers to spend part of the week at home has not necessarily benefitted local businesses in smaller towns and cities in the way many had predicted.
“There hasn’t been this equivalent big bounce in local spending to match the decline in the share of spending that’s going into the city centre,” Swinney told the committee.
“From our data, it looked like suburban supermarkets had probably been the biggest winner in the shift in the share of spending happening within city centres.”
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