The Office for National Statistics (ONS) estimated the UK economy grew in November by 0.1 per cent but most economists were expecting gross domestic product (GDP) to rebound by 0.2 per cent.
Experts have said the two factors combined make an interest rate cut by the Bank of England a near certainty at the start of February.
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Read MoreThe Bank’s primary target is to get inflation to 2 per cent, and so lower inflation makes a rate cut – from the current level of 4.75 per cent – more likely, but the state of the economy can also play a part in the decision.
So the bank’s Monetary Policy Committee (MPC) can cut rates to stimulate spending and economic activity.
“Together with December’s softer-than-expected CPI inflation print, today’s release revealed that the economy continued to have little momentum towards the end of last year, leaving us content with our view that the Bank will cut interest rates to 4.5 per cent in February,” said Ashley Webb of Capital Economics.
She said: “We expect the MPC to continue easing policy over 2025, taking base rates down to 4 per cent by the end of the year.”
Despite the slight rise in Thursday’s data, there are mounting fears the economy is heading for a period of so-called stagflation, where there is little or no economic growth combined with persistent inflation.
The November GDP figures take in the period after Ms Reeves’ first Budget on 30 October, which saw her announce £40bn of tax rises including a hike in employers’ national insurance.
Those on standard variable and tracker deals would see their costs drop immediately.
But some mortgage experts have warned that rates aren’t certain to fall even if interest rates do.
“That could change over time but too early to expect a return of sub-4 per cent rates in the current climate.”
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