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When will UK base rates start to rise?

UK base rates have remained at 0.5% for some months now as the UK government looks to shore up the UK economy and try to inject more economic activity across the board. However, despite the fact that base rates have remained historically low for some time now there is still a need for significant improvement in liquidity levels in the commercial money market.

Not only are we seeing businesses struggling with their cash flow and investment capital, but UK consumers are also struggling to refinance their credit card debts and mortgage liabilities. The UK government is doing as much as it can at the moment, having injected significant amounts of money into the banking system and encouraged the Bank of England to retain base rates at historically low levels. So what next?

If you think of the UK economy as a large ship, it will take some time for this to turn around and while the UK government has injected capital into the economy the recovery will not happen overnight. It will likely be a gradual build-up of steam in the UK economy which will then see a rise in economic activity, economic confidence and ultimately consumer spending. Whether this will happen next week, next month or next year remains to be seen but at some point the billions upon billions of pounds invested by the UK government will make a difference.

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