10 years since the last interest rate rise

10 years since the last interest rate rise

It has now been more than 10 years since there was an interest rate rise in the UK. Back on the 5th July 2007 the Monetary Policy Committee voted to increase rates to 5.75% and, little did we know it then, the global economy was about to go into meltdown.

A decade later and the Bank of England have been making noises about an interest rate rise but nothing as materialised as yet. Clearly, things are very finely balanced in the UK at the moment. What with Brexit and high levels of consumer debt, an interest rate increase would not be well received by many people and could have a seriously detrimental effect on the economy.

There’s no doubt that low interest rates over the last 10 years has helped to prop up the UK economy but for savers and many pensioners, low interest rates have seen their investment returns dwindle significantly so there’s definitely been winners and losers as far as low interest rates are concerned.

Over the last 12 months there has been a sharp rise in consumer borrowing and the current situation of poor wage growth and rising inflation has meant that more and more people are turning to credit to fund their living expenses.

Therefore, the Bank of England have a bit of a quandary. Do they raise interest rates to curb the amount of consumer borrowing or do they keep the current status quo so that consumer spending isn’t damaged too much and impacts badly on the UK economy?

It will be interesting to see how this one plays out over the next few months.