Source: BBC News - ‘Bank boss ready to cut rates if job market slows’
The Bank of England has said it could make bigger interest rate cuts if the UK job market shows signs of weakening. In an interview with The Times, reported by the BBC, Governor Andrew Bailey said he believes interest rates are likely to go down:
"I think the path [for interest rates] is down.
"But we continue to use the words 'gradual and careful' because... some people say to me, 'why are you cutting when inflation's above target?’"
The Bank’s base rate is currently 4.25%, and it will be reviewed again on 7 August. Many experts expect a rate cut at that meeting, which could impact businesses, mortgages, savings, and borrowing costs.
Mr Bailey explained that although inflation is still above the Bank’s 2% target, the economy is not growing as fast as it could. He pointed to signs of “slack” - a term used to describe when parts of the economy, like people or resources, are not being fully used. If that slack increases, the Bank may cut rates more quickly to support growth.
This shift comes after the government increased employer National Insurance contributions (NICs) from 13.8% to 15% in April. The change is expected to raise £25bn a year but has made hiring more expensive for many businesses. One employer, Ian McAllister of MAN Commercial Protection, told the BBC that the increase had made hiring “challenging” and warned about the risk of a recession.
Still, others see hope in the possibility of rate cuts.
At APSCo, we’re keeping a close eye on these economic changes and what they mean for the professional recruitment sector, and our members. As highlighted in this BBC report, interest rate decisions and hiring trends are closely linked - and it’s important for our members to understand how these shifts could affect their business and clients.
In partnership with Christian Spence, economist and founder of Economic Analytics, we have compiled a detailed and insightful analysis of the economy in Q2 2025 and what you can expect in the coming months. APSCo members can access this here.