UK executives call on Bank of England to cut rates amid sinking confidence in economy - reports
Markets are now expecting up to six 25-basis-point cuts by the end of the year.
According to reports by Bloomberg, mounting fears over an incoming recession drove the Institute of Directors' Economic Confidence index (ECI) to a four-month low.
CBI forecasts no Bank of England rate cuts until at least 2026
The index dropped to -28 in December from -21 in November, the lowest level since August and close to 2023's lowest score.
The ECI measures UK company directors' optimism regarding the economy for the next 12 months.
Roger Barker, director of policy at the IOD, argued that a rate cut would be «justified» to help kickstart business confidence, as executives ended 2023 with a «relatively depressed» sentiment.
There has also been speculation regarding the BoE being potentially forced to cut rates as early as May 2024 if policymakers switch their focus from inflation to a stagnant economy, reinforcing investors' outlooks of an early cut.
Markets are now expecting up to six 25-basis-point cuts by the end of the year.
UK economy teeters on recession following revised ONS figures
The ECI results followed GDP revised data from the Office for National Statistics last month, which found UK growth fell 0.1% in the third quarter of the year, placing the country in potential recession territory.
«With inflationary pressures abating, business is in dire need of a boost if it is help drive meaningful economic growth in 2024,» Barker said.
«Although aspects of the business environment have improved in the last couple of months, particularly with regard to inflation, this is not yet exerting a meaningful impact on business decision-making.»
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