Bank of England must release brakes by cutting interest rates, says ALEX BRUMMER

Nothing will contribute more to Labour’s growth agenda than lower interest rates.

It would boost a lagging housing market, make it easier for businesses to borrow and expand, and ultimately reduce the cost of servicing a massive national debt.

The Bank of England’s caution needs to end at a time when other Western central banks have moved more quickly to cut rates.

Wage growth, which has been seen as a key obstacle to reducing borrowing costs, is falling.

In particular, wage growth in the dominant services sector, closely monitored by the Monetary Policy Committee that sets interest rates, has fallen from 5.6 in the first half of 2024 to 3.6 now.

Although overall unemployment improved from 4.1 percent of the labor force to 4 percent in August, there are signs that a relatively strong labor market is easing.

The number of payrolls has decreased and vacancies are decreasing. The energy transition, as seen in Port Talbot and Grangemouth, could make things worse.

By the time of the next interest rate meeting in November, Gov. Andrew Bailey and his colleagues will have a clearer view of consumer prices, which are expected to fall somewhat when September data is released today, and the fiscal stance.

Rachel Reeves’ first Budget on October 30 will include an alphabet soup of tax rises, with employers’ National Insurance Contributions (NIC), Inheritance Tax (IHT) and Capital Gains Tax (CGT) ) in the Chancellor’s arsenal, along with an assault on online rights. bet.

The International Monetary Fund’s fiscal watchdog supports Reeves’ tax increase plans. He argues that with debt growing in the UK at a faster level than in the years before the pandemic, delaying efforts to reduce it would be “costly”.

The Fund also endorses the idea that leaving room for public investment is the right way forward. It is not surprising that the IMF wants to see prudence now and not later.

All the more reason for the Bank to lower interest rates as quickly as possible to boost confidence and avoid a slowdown.

strong currency

The fight for survival in De La Rue has received a decisive boost. As one of the oldest names on the London Stock Exchange, its disappearance would have been a crushing blow.

Survival is now possible following the sale of its authentication division for £300 million to Connecticut-based Crane NXT. The sale, engineered by chief executive Clive Vacher, sent the under-pressure share price up 14.4 per cent and the shares have improved 27.5 per cent so far this year.

The sale allows the banknote printer to clear crippling debt and pay an additional £12.5m into the pension fund, which will come as a relief to current and former employees who may have feared being thrown into the Pension Protection Fund with reduced benefits. .

It is hugely disappointing when a technology-driven company ends up in foreign hands, as that usually means industrial knowledge is moved overseas.

De La Rue is now reduced to a purely monetary enterprise. That may not seem like a good place to be given the rise in digital transactions among G7 advanced economies. In the UK, currently only dry cleaners and construction companies seem to favor cash payments.

However, Vacher is optimistic about the prospects for paper and polymer currencies, where De La Rue is claimed to have some of the most advanced technologies on the planet.

The transition to polymer and decisions by central banks to cut new banknotes during the pandemic mean order books are filled with £250m.

Ideally, Vacher would also like to sell currency, settle remaining liabilities and finally reward rebel shareholders for their patience.

What a sad end it would be for a 211-year-old company inextricably linked to the British heritage of banknote and securities printing.

Risk of escape

Nothing can create more discouragement than the thought of a flight from an overcrowded and under-facilitied Stansted.

Therefore, the opening of a £1.1bn terminal expansion over the next five years will come as a relief to travelers and should ease congestion at London airports. Heathrow needs to get into action with the long-delayed third runway.