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Budget Could Knock 0.5% Off Inflation Next Year, Bank Chief Says
The Chancellor’s Budget plan including capped fuel duty and frozen rail fares is projected to lower UK inflation by up to 0.5 percentage points, Bank of England says.
- On Tuesday, Clare Lombardelli, deputy governor of the Bank of England, said early analysis shows the Budget could cut inflation by up to 0.5 percentage points from the second quarter of 2026.
- Rachel Reeves' November Budget included fuel duty caps, energy price cuts, and rail fares frozen to reduce household bills by removing green levies and funding renewables.
- The Bank's Monetary Policy Committee will meet next week to consider rates at 4%, with markets pricing a quarter-point cut at almost 90%, a decision likely led by Governor Andrew Bailey.
- The Bank also said the measures may reduce household inflation expectations, with Lombardelli noting the slightly looser fiscal stance will push up GDP by 0.2% in 2027.
- Forecasts warned the Budget will also bring a small 0.1 percentage point uplift to inflation over the following two years due to electric vehicle charges and end of fuel duty freeze, while the hearing revealed a divided MPC between doves and hawks.
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Europe bulletin: UK spending slowdown, BoE inflation outlook, France budget turmoil
Consumer caution, shifting inflation expectations, political brinkmanship, and corporate resilience set the tone across Europe today. UK spending data shows households tightening their belts, even as the Bank of England signals modest relief ahead from Reeves’ budget. In France, Prime ...
Coverage Details
Total News Sources11
Leaning Left3Leaning Right2Center5Last UpdatedBias Distribution50% Center
Bias Distribution
- 50% of the sources are Center
50% Center
L 30%
C 50%
R 20%
Factuality
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