Keir Starmer is holding an extensive cabinet meeting with senior ministers following the Bank of England’s sharp revision of the UK’s growth forecast, a move that signals challenges ahead for the country’s economy. In response to rising inflation, the Bank of England cut interest rates slightly but also warned households to brace for higher inflation in the coming months.
The central bank’s decision, described as a “wake-up call” for Chancellor Rachel Reeves, followed a dramatic reduction in the UK’s economic growth projections. The Bank of England now forecasts GDP growth to be just 0.4% in the first quarter of 2024, a significant drop from the previously anticipated 1.4%. Projections for 2025 are similarly low, with growth expected at just 0.75%. The overall outlook remains subdued, signaling that the UK economy will continue to struggle in the near future, according to the Daily Record.
In response to these concerning projections, Prime Minister Keir Starmer and top Cabinet ministers are convening for what is expected to be a comprehensive meeting away from the usual No10 surroundings. The meeting will include routine weekly briefings from government departments, followed by a “political cabinet” session. During this session, civil servants will leave, allowing ministers to engage in candid discussions on various matters, including Labor’s performance in national polls and preparations for the upcoming local elections in May.
Since Labor’s sweeping victory in July’s election, the party’s standing in Westminster polls has sharply declined, a trend attributed to a series of decisions made under the current government, which many believe were influenced by a challenging legacy left by the Tories, reports the Mirror.
Chancellor Rachel Reeves acknowledged the impact of the Bank of England’s interest rate cut but expressed dissatisfaction with the UK’s growth rate. “This interest rate cut is welcome news, helping ease the cost of living pressures felt by families across the country and making it easier for businesses to borrow to grow,” Reeves said. However, she added, “I am still not satisfied with the growth rate. Our promise in our Plan for Change is to go further and faster to kickstart economic growth to put more money in working people’s pockets.”
Prime Minister Starmer also spoke positively about the interest rate reduction, framing it as a win for the public’s disposable income. “The interest rate has come down, that’s the third drop in interest rates since July,” Starmer noted, adding, “We are absolutely determined we are going to grow the economy, and I don’t mean a line on a graph, I mean people feeling better off.”
The discussions within the Cabinet are set to shape the government’s approach to tackling economic challenges, particularly in light of the Bank of England’s grim forecast. As Starmer and his team focus on stimulating growth, they remain under pressure to deliver tangible results for the public.
