A senior economist has rebuked Labour for what he described as a “daft post” after the party appeared to take credit for the Bank of England cutting interest rates six times since Sir Keir Starmer became prime minister.
Simon French, chief economist at Panmure Liberum, said it was “either wilfully ignorant or plain ignorant” for Labour to suggest it was responsible for the fall in borrowing costs.
[embedpress]https://x.com/Frencheconomics/status/2001926911832793581[/embedpress]The Bank of England, which operates independently of government, raised interest rates to a peak of 5.25% in response to inflation surging to 11.1% in 2022 following the energy crisis triggered by Russia’s invasion of Ukraine. It began cutting rates in August last year as inflation moved back toward the Bank’s 2% target, a process that was already underway before the general election. Inflation fell to 2% in May 2024, two months ahead of the vote.
Labour posted a chart on social media showing interest rates rising before the election and falling afterwards, implying a link to its return to power.
French said UK monetary policy largely moves in step with global trends because of highly integrated product and capital markets. While it was reasonable to welcome the relief lower rates bring to household finances, he argued that claiming political credit for 150 basis points of rate cuts was misleading.
