Bank of England Roundtable: 25 Sep 2025

The Bank of England shared its latest view on the economy. Inflation, the rate at which prices rise, is expected to keep slowing down. If that continues, the Bank is likely to lower interest rates next year, possibly bringing them down to around 3.5%.

• The Bank Rate (which affects borrowing costs) stayed at 4% in September, but further cuts are likely in 2026 if price rises continue to ease.
• Other parts of the economy (like construction, finance, and manufacturing) are showing signs of picking up.
• The Bank expects the UK economy to grow slowly: by 1.1% in 2025, 1.2% in 2026, and 1.6% in 2027.

Retailers, however, painted a more cautious picture. While food sales are holding up, other types of shopping, like clothes, furniture, and general merchandise, are struggling. Many said that even when sales look higher, it’s mostly because prices have gone up, not because people are buying more.

Topics discussed included:

• Rising costs: wages, taxes on jobs, shipping, and currency changes are all squeezing profits.
• How retailers are responding: some are investing in automation and AI, others are restructuring or cutting back to stay afloat.
• The rise of second-hand shopping: younger customers are buying more through resale platforms, which affects demand for new products.
• Worries about the upcoming government Budget: many fear new taxes or higher business rates could make things worse.

Overall, retailers are being cautious. The Bank’s outlook gave some hope, but most businesses still face high costs and uncertain demand. The focus now is on staying resilient and managing expenses carefully.

The Bank’s next interest rate decision is on 6 November. Rates are expected to stay at 4%, but there’s a growing chance of a cut, especially after recent inflation figures came in lower than expected.

The next Bank of England Directors’ Roundtable will be held online on Wednesday, 11 February 2026. It’s a chance for retailers to share views on customer demand, hiring, costs, and other business challenges. Rob Elder will give a short update on the Bank’s outlook and answer questions.

 

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