Laith Khalaf, senior analyst at Hargreaves Lansdown, examines the long-term impact of a decade without any interest rate rises and the negative affect on UK consumers
It has now been a whole decade since interest rates last rose in the UK. On 5 July 2007, the Bank of England’s monetary policy committee voted to increase rates to 5.75%, just as the wheels were about to come off the global economy. The subsequent loosening of monetary policy has led to base rate slumping to 0.25% and £435bn of liquidity being injected into the economy via quantitative easing.
Low interest rates undoubtedly helped to prop up the economy in the wake of the financial crisis, by lowering the cost of debt for UK consumers and companies. However, the burden of loose monetary policy has very much fallen on those with cash in the bank, who have seen the interest they receive wither away to virtually nothing.
