Despite the Bank of England cutting interest rates from 5.25% to 5% in August, many are hesitant to believe that future cuts will be made in the near future.

In the same month, the government agreed to several above-inflation pay awards to public sector bodies including a 5% pay rise for civil servants and up to 8% for doctors. Train drivers also secured a three-year pay rise totalling 15%, costing more than £100 million.  It is hoped that the pay awards will bring to a close the recent industrial action, although it’s unclear if the dust has finally settled yet. Further strike action was proposed days after the deal but called off at the end of August. Are more strikes yet to come?

Encouragement for trade unions?

The total cost of recent pay awards is over £9 billion so understandable the government hopes that the trade unions involved (and their members) will be ‘content’ though that may not be the case. Aslef Union, one of the biggest train driver unions, has since announced 3 months of strikes, as well as Border Force officers at Heathrow issuing strike action.

Have the pay awards been a symbol of encouragement to other trade unions? Quite possibly.

Could interest rates be held to counterbalance the pay awards?

It’s entirely feasible that the pay awards could add higher inflationary pressures, and that we’ll see the Bank of England hold interest rates. Which isn’t the news businesses or consumers want to read about.  Businesses have held off from investing because finance is too expensive. Consumers are desperate to see their mortgage rates come down and ease the pressure on personal finances.

If your business finances have been feeling the strain and you’re concerned about the impact of interest rates being maintained, talk to the team at TruSolv. You don’t have to make any immediate decisions but with our 30 years’ experience, we can help you to better understand potential options available to you. Call 0808 196 8676 or email help@trusolv.co.uk.

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