The Guardian view on interest rates: the Bank of England on its own won’t revive growth | Editorial Base rate cuts may ease borrowing costs but without stronger public spending and targeted tax relief, economic stagnation will persist.
Ms Reeves is betting that steeply declining borrowing costs will have an immediate impact on businesses and households in a way that capital investment – the core of the chancellor’s “plan for growth” – never could.
Rather than prioritising deficit reduction, Ms Reeves should boost spending on public services and job creation – ensuring fiscal policy aids, not hinders, economic wellbeing.
Ms Reeves’s real test comes in 2026-27 when spending cuts and tax hikes kick in to meet self-imposed fiscal rules.
Much of the government’s borrowing is likely just offsetting capital outflows due to the trade deficit, rather than adding to private sector spending power.
