Ahead of next weeks’ Bank of England base rate decision, Katie Horne, savings expert at Flagstone, comments: 

  • The unexpected 0.1% contraction in GDP in October – along with a 0.1% fall across the three months to October – makes a base rate cut next week even more likely. The data will reinforce the Bank’s concerns about sluggish growth, adding to an already strong case for easing rates.

  • It follows a tight vote at the last meeting, a cautiously optimistic drop in inflation, and early signs that mortgage lenders are engaging in rates war to release some of the pent-up demand. On top of that, the next CPI bulletin will be released on 17 December, just before the Bank of England votes.

  • A base rate cut may mean lower interest rates for savers so now may be a good time to take advantage of higher rates while they are still around.

  • Many banks have already largely factored in a base rate cut at the next MPC meeting and priced it into the savings rates on offer. And with banks keen to meet their end-of-year deposit targets, there should be plenty of products available whose rates beat inflation. Using some of the festive period to spring-clean your savings accounts and take advantage of many of the competitive year-end rates available could be time very well spent.

  • The last time the base rate was 4% was February 2023, and top savings rates then weren’t nearly as competitive as they are now. It’s still a great time to find strong savings products.

  • There can be some advantages to lower interest rates. Slightly softer rates may cushion the impact felt by savers of the Treasury’s decision not to change the Personal Savings Allowance thresholds. A basic rate taxpayer can only hold up to £25,000 in savings accounts earning 4% to stay below the tax-payable threshold. The interest they earn on anything above is taxed at 20%. Should the rates they receive fall to 3.5% on average, they can save up to £28,000 tax-free.



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