UK Interest Rates To Fall More Slowly Than Expected After Budget, Claims Report

UK interest rates will fall by less than expected over the next two years after Rachel Reeves revealed significant spending and borrowing plans in the budget, according to an influential report.

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In its annual economic survey, the Organisation for Economic Cooperation and Development (OECD) said UK inflation would also surpass previous forecasts next year, and upgraded growth projections for the economy, because of a boost from October's budget.

The OECD said the global economy would "remain resilient" over the coming years but that "risks and uncertainties are high".

It came as the governor of the Bank of England said the way businesses react to the national insurance increase is the "biggest issue" after the budget, also warning that economic uncertainty was rising in the UK and globally.

Andrew Bailey said it was not yet clear what effect the tax change could have on UK inflation.

Bailey said: "The level of uncertainty is rising at the moment. Certainly, some of that is domestic and some of that is global.

"I think the biggest issue now in the immediate future is the response to the national insurance change; how companies balance the mixture of prices, wages, the level of employment, what is taken on margin, is an important judgment for us."