Business
Interest rates could remain at 4% until 2026, economists say
UK interest rates are set to be held at 4% until 2026 as lingering concerns about the economy prompt policymakers to act cautiously, economists have said.
The Bank of England’s Monetary Policy Committee (MPC) will announce its latest decision on Thursday.
The central bank is widely expected to keep rates at 4% after cutting them from 4.25% in August.
Economists believe the MPC may avoid cutting rates at meetings in November and December, meaning the figure could be kept on hold until February.
This would be a setback for mortgage holders with millions still expected to refinance on to higher rates in the coming years.
Thomas Pugh, chief economist for auditing firm RSM UK, said: “It’s all but guaranteed that the Bank of England will hold interest rates at 4% at its meeting on Thursday.
“The committee will stick to its gradual and cautious guidance, as it continues to try to balance rising inflation with a weakening labour market.”
UK Consumer Prices Index (CPI) inflation rose to 3.8% in July, from 3.6% in June, meaning it remained at the highest level since January 2024.
This was largely driven by food and drink prices rising, while overall wage inflation has remained at 5%, according to the latest data from the Office for National Statistics.
Interest rates are used by the MPC to control inflation and bring it down to the 2% target.
The UK labour market has been stagnating with the unemployment rate remaining at a four-year high and job vacancies continuing to decline.
Philip Shaw, an economist for Investec, said he was expecting rates to be held at 4% until the end of the year, with the next cut in February.
He said recent economic data will be “unlikely to disperse the committee’s collective doubts over whether the inflationary coast is clear to resume easing” monetary policy by November.
Rob Wood and Elliott Jordan-Doak, economists for Pantheon Macroeconomics, said recent remarks from the Bank’s governor Andrew Bailey indicated he was happy with the financial markets pricing in only a 40% chance of another rate cut this year.
“The late Budget will likely also encourage the MPC to wait until December at least before considering another cut,” they said.
“We expect little change to the MPC’s guidance from August, given the hawkish dataflow and MPC members’ comments suggest little reason or desire to change their position from early August.”
In August, policymakers emphasised future rate cuts will need to be made “gradually and carefully” amid uncertainty about the economic outlook.
Chancellor Rachel Reeves is due to deliver her autumn Budget on November 26, and is widely expected to raise taxes to balance the books.
The annual tradition of “Dry January” turned into “Damp Monday” at one supermarket, with shoppers returning to alcohol consumption in the middle of the month.
Waitrose said that the month was “not so dry after all,” identifying January 12 as “Damp Monday” after sales of wines, beers, and spirits surged by 11 per cent compared to the week before.
The grocer noted a “significant softening” of the Dry January trend over the past five years, suggesting a more balanced “Damp January” approach is now prevalent.
While alcohol sales in January 2022 were 42 per cent lower than other months, this year saw a reduced drop of just 25 per cent.
Notably, Argentinian and Chilean wine sales experienced a considerable boost last month, rising by 25 per cent and 27 per cent respectively compared to the previous year.
Compared to this time last year, searches on Waitrose.com for “Argentinian wine”, “red wine” and “Chilean wine” were up 300%, 63% and 18% respectively.
Pierpaolo Petrassi, head of beers, wines and spirits at Waitrose, said: “Damp is the new dry, as we’re seeing customers move away from the ‘all-or-nothing’ mentality and instead look towards more mindful, ‘damp’ moderation rather than quit entirely.
“This shift sees the likes of a luxury Argentinian Cabernet sitting comfortably alongside premium non-alcoholic spirits as sophisticated sips, proving that the modern palate values flavour profiles and social connection over the buzz alone.
“No doubt the no and low trend skyrocketed in 2022 as the result of the ‘pandemic reset’ transitioning out of the final lockdowns, as well as the ‘sober curious’ movement going mainstream on social media.
“Now, 2026 is the ‘lifestyle’ year, with customers finding balance as part of a more tempered, year-round approach to drinking.”
Data reported by The Spirits Business trade publication from early this year suggested that while 58% of the UK public aimed to cut back, a significant portion – roughly 31% – had opted for a “damp January” – reducing intake rather than cutting it out entirely.
Business
Budget eases PF, ESI deduction rules for employers, allows relief for delayed deposits – The Times of India
In a move expected to bring relief to employers and reduce routine tax disallowances, the finance bill has proposed a key change to the treatment of employees’ provident fund (PF), ESI and similar contributions, allowing deductions even where there is a delay in deposit, provided the amount is deposited by the employer entity with the relevant welfare fund authorities before the due date of its Income-tax return.At present, employers can claim deduction for employees’ PF and ESI contributions only if the amounts are deposited within the strict timelines prescribed under the respective welfare laws. Even a minor delay permanently disqualifies the expense for tax purposes, a position that had been settled by the Supreme Court (SC) after years of litigationUnder the proposed amendment to Section 29 of the Income-tax Act, 2025, the definition of “due date” for claiming deduction of employees’ contributions is set to be aligned with the due date for filing the income-tax return by the employer entity.Explaining the shift, Deepak Joshi, a SC advocate said employers are currently held to a rigid standard. “The law, as interpreted by the SC, meant that if employee contributions were not deposited within the due date under the relevant welfare fund laws, no deduction was allowed — even if the payment was made before filing the income-tax return,” he said.“The proposed amendment substitutes the definition of ‘due date’ to mean the due date of filing the income-tax return. The positive impact is that even if there is a slight delay in depositing employees’ contributions, so long as the amount is deposited before the return-filing deadline, the employer will be allowed the deduction,” Joshi added. Experts view the move as part of the government’s broader effort to soften compliance rigidities and reduce avoidable litigation.
Baby boxes are being delivered to expectant families in some of Wales’ most deprived areas.
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