UK interest rates higher for longer due to Budget, says OECD

Published On Dec 4, 2024, 6:23 AM

The OECD forecasts that UK interest rates will remain higher for a longer period due to recent budget measures aimed at boosting the economy. Although these new measures are expected to enhance economic growth, they will also cause borrowing costs to decrease more slowly than anticipated. Interest rates, currently at 4.75%, are expected to decline to 3.5% by early 2026, influenced by persistent inflation projected at 2.7% for the upcoming year.

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The expectation of prolonged higher interest rates can negatively impact sectors sensitive to borrowing such as real estate and utilities. Companies reliant on debt may face increased costs and reduced profitability, which could affect their stock prices negatively.

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