As of the most recent Bank of England Monetary Policy Committee decision in December 2025, the UK base rate was cut to 3.75%, the lowest level in nearly three years.
Base Rate is the rate at which the Bank of England charges commercial banks and other lenders for borrowing overnight and acts as the cornerstone of UK monetary policy.
While it might seem like a technical figure, it still matters to both businesses and households because it influences the cost of borrowing and the return on savings across the economy: higher Base Rates generally mean more expensive loans and mortgages, and better returns on savings, while lower rates tend to stimulate spending and investment.
Crucially, many lender rates, especially for mortgages and business loans, are not set directly against Base Rate alone but are shaped by swap rates, which are market-based interest rates that lenders use to price long-term loans and hedge risk in financial markets.
When the Base Rate changes, it feeds into expectations for swap rates, which in turn affects the interest rates lenders offer their customers. The Bank of England’s next base rate review, when the Monetary Policy Committee meets to decide whether to change official interest rates, is scheduled for 5 February 2026.
Bank of England
Credit card spending surged in November
Credit card spending in the UK rose sharply in November, reaching nearly £78bn, according to Bank of England data. Annual growth in credit card borrowing rose from 10.9% in October to 12.1% in November, with this the biggest increase since January 2024. The data also shows that borrowing using other forms of consumer credit – including car dealership finance and personal loans – rose by £100m to £1.1bn. Martin Beck, chief economist at WPI Strategy, said: “It remains unclear whether higher credit card spending reflects improving confidence or a greater reliance on credit.” Alex Kerr, UK economist at Capital Economics, said the data “adds to the evidence” that speculation over tax rises ahead of the Budget “didn’t influence households’ spending decisions too much.”
Family businesses fear bleak economic future
Research for the Jobs Foundation reveals that 78% of family businesses in the UK are pessimistic about the economy in 2026. The survey indicates that many owners believe the current tax and regulatory environment is worse than that of the 1970s. Matthew Elliott, president of the Jobs Foundation, noted that 80% of firms “feel like the Government doesn’t understand what it is like to run a business,” adding that more than three-quarters “think successive governments have lacked the ambition to make the UK a really great place to do business.” Additionally, 68% of respondents doubt the Government’s commitment to economic growth.
Retailers face administration
Retailers Claire’s and The Original Factory Shop are on the brink of administration, putting around 2,550 jobs at risk, after their owner Modella Capital said worsening conditions on UK high streets left no viable alternative. Modella cited sharply falling pre-Christmas footfall, weak consumer confidence, fiscal pressures and rising costs, saying neither retailer could realistically return to profitability. Insolvency proceedings have begun, with advisers Kroll set to handle Claire’s potential administration, affecting about 1,350 jobs, and Interpath likely to oversee The Original Factory Shop, where around 1,200 roles are threatened.
Property flipping hits decade low
The number of properties flipped in England and Wales fell to its lowest level in over a decade, according to estate agency Hamptons. Only 2.3% of homes sold between January and March 2025 were bought and resold within 12 months, with this the lowest proportion since 2013. While average gross profits from flipping rose to £22,000, this is a 42% drop from £38,000 in early 2022. This comes with rising costs, including increased stamp duty and construction expenses, increasingly eroding profits.
UK property values face £11bn hit
Proposed rent controls in the UK could lead to a £11bn decline in commercial property values, according to economist Martin Beck from WPI Strategy. The Government aims to ban upward-only rent hikes to support small businesses. However, Beck warns that this could undermine investor confidence and create risks for large leases. He suggests that the ban should only apply to small businesses with fewer than 50 employees. Beck stated: “The ban represents a form of rent control introduced for political reasons… undermining essential investment in larger property schemes.” A Government spokesperson defended the measure, citing benefits for small businesses.
