The Bank of England has lifted UK interest rates to 4% at a time the economy continues to battle with inflation.
This is the 10th meeting in a row at which the Bank’s Monetary Policy Committee has voted to raise UK borrowing costs.
The increase from 3.5% puts more pressures on mortgage payers and businesses struggling to pay off their loans.
This is not good news for savers as people will be “losing value in real terms” and also this will put “relentless pressure on retirement plans.”
Andrew Megson, CEO of My Pension Expert, said, “Another jump in interest rates, now to a 15-year high, would be great news for pension planners in times of stability – but we’re not in those times.
“The base rate is still less than half the rate of inflation, meaning people’s savings are losing value in real terms.
“Living costs are continuing to rise and this is placing relentless pressure on retirement plans. My Pension Expert’s own research found that only 35% of Britons think they’ll be able to retire when they want to.
“It certainly seems that Jeremy Hunt might get his wish to keep more people in their 50s, 60s and even 70s staying in work. But, of course, it is not for him to demand that.
“Rather, everything possible should be done to support people in their financial planning, allowing them to achieve the retirement they deserve despite these volatile economic times.
“To that end, more should be done to champion the role of independent financial advice. While there are likely to be tough times ahead, seeking advice will provide welcome reassurance that Britons are doing all that they can to protect their hard-saved pension savings and achieve their retirement goals.”
Mohsin Rashid, CEO of ZIPZERO, said, “Many had hoped the IMF’s sobering analysis earlier this week, revealing that the UK is to be the only major economy to shrink in 2023, would inspire the Bank of England to hit the brakes.
“Instead, the MPC’s latest increase marks the tenth in a row since 2021 and a devastating blow to British consumers and businesses.
“With the outlook on Britain’s growth so bleak, the Bank’s latest step is likely taken with great reluctance and yet taken, nonetheless. Clearly, the Bank of England has no faith in the Government’s ability to tackle inflation alone, which has remained in double-digits for months.
“Yet such increases are simply not sustainable. As the Chancellor continues to shout about making Britain the next Silicon Valley, interest rates now stand at their highest level since 2008 and life continues to get harder.
“Abandoned by their government and faced with great uncertainty ahead, consumers and businesses must band together and provide mutual support. For businesses, that means restraint, they must avoid passing rising costs onto consumers and focus on incentivising loyalty, through which consumers will return the favour.”