Introduction: Bank of England could cut rates faster if jobs market slows, governor says
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The pound has dropped to a three-week low this morning, after the governor of the Bank of England said it could make larger cuts to interest rates if the jobs market slows quickly.
Andrew Bailey told The Times that “slack” was opening up in the UK economy, following the increase to employers’ national insurance contributions. That slack should create downward pressure on inflation.
Bailey insisted: “I really do believe the path is downward” for interest rates. Bank rate is currently 4.25%, following four quarter-point cuts in the last year, with the Bank next scheduled to set rates on 7 August,
Bailey added:
“If we saw the slack opening up much more quickly, that would lead us to a different conclusion.”
“I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words ‘gradual and careful’ because … some people say to me, ‘Why are you cutting when inflation’s above target?’”
Governor Bailey also pointed to Rachel Reeves’s decision to hike taxes on employers, saying companies were:
“adjusting employment and hours and also having pay rises that are possibly less than they would have been if the NICs change hadn’t happened”.
Last week, the Guardian revealed that the National Trust is to cut at least 550 jobs in efforts to save £26m after changes made in Reeves’s debut budget pushed up labour costs.
Hospitality firms have repeatedly warned that higher NICS will force them to cut jobs.
And indeed, new data this morning shows that the number of people hunting for jobs has surged at the fastest rate since the height of the Covid pandemic.
Following Bailey’s rate cut hint, the pound has dropped by 0.2% this morning to $1.3467.
That’s its lowest level since 23 June, three weeks ago, extending its recent losses.
“,”elementId”:”2f7059dd-ba6b-484e-b8f3-5401ee32c540″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The pound dropped to a three-week low after the governor of the Bank of England said it could make bigger cuts to interest rates if the job market slows too quickly.
“,”elementId”:”b8fb4de8-4aa7-4a96-90d3-56213c78bbdb”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Andrew Bailey said “slack” was opening up in the UK economy, as higher taxes have squeezed employers.
“,”elementId”:”2ae9fba5-3949-4156-980f-6899bf3133c6″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
He told the Times: “I really do believe the path is downward” for interest rates. The bank rate stands at 4.25%, after four quarter-point cuts in the last year, and the Bank is next scheduled to make another decision on 7 August.
“,”elementId”:”ad7dc231-6817-4766-9511-024b7a5a2423″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Bailey said:
“,”elementId”:”bf7a4ea3-dc9f-4ce8-873c-688042b57f72″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”
n
“If we saw the slack opening up much more quickly, that would lead us to a different conclusion.
n
“I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words ‘gradual and careful’ because … some people say to me: ‘Why are you cutting when inflation’s above target?’”
n
“,”elementId”:”78238bfb-8655-4a11-a80c-e36703ac0d9f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The market-implied probability of a UK interest rate cut in August jumped to over 88% following Bailey’s comments.
“,”elementId”:”e3d648ca-dc34-49cd-a308-c9acc22430a3″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”prefix”:”Related: “,”text”:”Pound drops after Bank of England says it could cut interest rates more if jobs market slows”,”elementId”:”b493ce00-9de4-4fe5-ac4b-774234684713″,”role”:”thumbnail”,”url”:”https://www.theguardian.com/business/2025/jul/14/pound-bank-of-england-cut-interest-rates-jobs-uk-andrew-bailey”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
European markets have weakened after Donald Trump announced a 30% tariff on EU imports – a threat described as “absolutely unacceptable and unjustified” by Denmark’s foreign minister today.
“,”elementId”:”5ba08eb1-723f-440a-b448-1777028d777f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Germany’s DAX is down 0.8% today, with France’s CAC 40 index losing 0.5%.
“,”elementId”:”93623679-a765-4292-92ce-090c16d18f0c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The EU’s lead negotiator with the US, Maroš Šefčovič, warned that a tariff of 30% or more would have a huge impact, making it “almost impossible to continue” current transatlantic trade, which is worth €4.4bn (£3.8bn) a day.
“,”elementId”:”8398fb0e-44e1-44e1-b19a-798ddd90144e”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”prefix”:”Related: “,”text”:”Trump’s 30% tariffs would ‘practically prohibit’ EU-US trade, says Šefčovič”,”elementId”:”1c3ebd4d-704c-40b2-9c00-5dd4da96eaff”,”role”:”thumbnail”,”url”:”https://www.theguardian.com/us-news/2025/jul/14/trump-tariffs-eu-us-trade-says-sefcovic”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Ministers are to consider handing over ownership of the Post Office to its operators after the Horizon IT scandal.
“,”elementId”:”ef9a4097-f039-4f49-9f0b-0392e1b9ca48″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”prefix”:”Related: “,”text”:”Post Office could hand ownership to staff amid review after Horizon scandal”,”elementId”:”2040a800-5607-42a4-b806-98b1c691becd”,”role”:”thumbnail”,”url”:”https://www.theguardian.com/business/2025/jul/14/post-office-ownership-review-horizon-scandal”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
A water company serving 3.9 million customers in London and south-east England has doubled the pay of its chief executive, despite the regulator saying it had “elevated concern” over its financial situation.
“,”elementId”:”be3acd51-d930-4093-a06b-cb47ee253ab1″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”prefix”:”Related: “,”text”:”English water firm doubles CEO’s pay despite ‘elevated concern’ over finances”,”elementId”:”2309fc49-8a1a-4d10-8beb-5c5e8ca885ad”,”role”:”thumbnail”,”url”:”https://www.theguardian.com/business/2025/jul/14/english-water-firm-ceo-pay-affinity-water”}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1752502529000,”blockCreatedOnDisplay”:”15.15 BST”,”blockLastUpdated”:1752502780000,”blockLastUpdatedDisplay”:”15.19 BST”,”blockFirstPublished”:1752502735000,”blockFirstPublishedDisplay”:”15.18 BST”,”blockFirstPublishedDisplayNoTimezone”:”15.18″,”title”:”Closing post”,”contributors”:[],”primaryDateLine”:”Mon 14 Jul 2025 15.19 BST”,”secondaryDateLine”:”First published on Mon 14 Jul 2025 06.45 BST”},{“id”:”687502ad8f088b778dd2ae90″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Over in Brussels now, the EU are holding a press conference following a Foreign Affairs Council meeting on trade.
“,”elementId”:”f3f9b885-305f-4dd3-82e3-85d38195733f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Lars Løkke Rasmussen, Minister of Foreign Affairs of Denmark, opens by explaining that ministers discussed the state of play and prospects for EU US trade relations, including possible EU countermeasures.
“,”elementId”:”9e37c484-d317-4405-8ea6-65e8008d9050″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Rasmussen adds that ministers also discussed President Trump’s announcement over the weekend of 30% general tariffs on the EU from 1 August, adding that “member states find [Trump’s announcement’] absolutely unacceptable and unjustified.”
“,”elementId”:”6928617a-0a6f-48b5-802c-e6df892c70cb”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Rasmussen declares:
“,”elementId”:”00e45916-8683-4ef7-ae23-6dcc31a4d5ea”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”
n
We are committed to continuing working with the US on a negotiated outcome. It has to be a mutually beneficial agreement on terms that are acceptable to both sides.
n
“,”elementId”:”b4cf9d09-1359-4006-bccf-486debb823b2″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
He adds that the EU is “prepared for all possible scenarios”.
“,”elementId”:”7b280fc6-4343-497a-92f8-218f9a371233″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”
n
If no satisfactory solutions can be found, the EU remains ready to react, and that includes robust and proportionate countermeasures if required.
n
“,”elementId”:”fe8aeb4c-638a-4993-8b8b-461234560c8c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Rasmussen says there was a “strong feeling of unity” in the room today.
“,”elementId”:”62851ffa-b707-411a-9280-2c236172ad58″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
You can watch the briefing here:
“,”elementId”:”1337d423-67e0-4f6b-b9d5-37fd2172f19a”},{“expired”:false,”assetId”:”3DeL7eelPfA”,”posterImage”:[{“url”:”https://media.guim.co.uk/83d986b31da8caf4ffd0123199da22f1ea7bc7dd/0_402_7728_4347/2000.jpg”,”width”:2000},{“url”:”https://media.guim.co.uk/83d986b31da8caf4ffd0123199da22f1ea7bc7dd/0_402_7728_4347/1000.jpg”,”width”:1000},{“url”:”https://media.guim.co.uk/83d986b31da8caf4ffd0123199da22f1ea7bc7dd/0_402_7728_4347/500.jpg”,”width”:500},{“url”:”https://media.guim.co.uk/83d986b31da8caf4ffd0123199da22f1ea7bc7dd/0_402_7728_4347/140.jpg”,”width”:140},{“url”:”https://media.guim.co.uk/83d986b31da8caf4ffd0123199da22f1ea7bc7dd/0_402_7728_4347/7728.jpg”,”width”:7728}],”id”:”ce7e0c32-a585-46ed-85dd-f752d6292384″,”elementId”:”946c8c9e-730e-41a1-b4bf-047f8e8a9f01″,”duration”:0,”_type”:”model.dotcomrendering.pageElements.YoutubeBlockElement”,”mediaTitle”:”Danish EU Presidency, European Commission hold press conference – watch live “,”channelId”:”UCIRYBXDze5krPDzAEOxFGVA”}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1752498861000,”blockCreatedOnDisplay”:”14.14 BST”,”blockLastUpdated”:1752499336000,”blockLastUpdatedDisplay”:”14.22 BST”,”blockFirstPublished”:1752499336000,”blockFirstPublishedDisplay”:”14.22 BST”,”blockFirstPublishedDisplayNoTimezone”:”14.22″,”title”:”Denmark: Trump tariff threat is “absolutely unacceptable and unjustified””,”contributors”:[],”primaryDateLine”:”Mon 14 Jul 2025 15.19 BST”,”secondaryDateLine”:”First published on Mon 14 Jul 2025 06.45 BST”},{“id”:”6874fb4e8f08755807c83620″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
White House National Economic Council director Kevin Hassett has told reporters at the White House this morning that trade talks are still under way between the US and the European Union, Canada and Mexico.
“,”elementId”:”382702e3-1d74-4cfa-981d-4233671745cf”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Asked about his expectations of talks with the EU, Hassett said:
“,”elementId”:”306b9ae3-7ee4-4181-b2a7-7a2f9052ad61″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”
n
“We’ll see … we’ve got a few weeks left.”
n
“,”elementId”:”7f53c54c-bf5e-4b37-8f7f-8469796a3333″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1752496974000,”blockCreatedOnDisplay”:”13.42 BST”,”blockLastUpdated”:1752497061000,”blockLastUpdatedDisplay”:”13.44 BST”,”blockFirstPublished”:1752497061000,”blockFirstPublishedDisplay”:”13.44 BST”,”blockFirstPublishedDisplayNoTimezone”:”13.44″,”title”:”White House adviser says trade talks continuing with EU, Canada, Mexico”,”contributors”:[],”primaryDateLine”:”Mon 14 Jul 2025 15.19 BST”,”secondaryDateLine”:”First published on Mon 14 Jul 2025 06.45 BST”},{“id”:”6874e2b38f08a97237f2e5d6″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Back in the markets, France’s long-term borrowing costs have hit their highest level since the eurozone debt crisis almost 14 years ago.
“,”elementId”:”dc6dab70-b5dd-421a-b4a9-3092dca33347″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
French 30-year bond yields have risen by 3 basis points (0.03 percentage points) to 4.23% this morning.
“,”elementId”:”fa1d9797-f8fe-4f55-9616-faf84bc33c80″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
That’s the highest level since November 2011, when the eurozone was gripped by political instability and political turmoil, reflecting some anxiety about the US-EU trade situation.
“,”elementId”:”43fea4e5-14e7-4cb9-96b5-b401939a7435″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Bond yields rise when bond prices fall, and are a gauge of the cost of issuing new debt.
“,”elementId”:”764bd71e-003a-489e-9db6-aefbfeeb73d5″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
French 10-year bond yields are flat on the day, right now, and still below levels hit in March this year…
“,”elementId”:”40a096a7-e71e-4b71-a6c8-0f8f7f96c1f3″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1752490675000,”blockCreatedOnDisplay”:”11.57 BST”,”blockLastUpdated”:1752491256000,”blockLastUpdatedDisplay”:”12.07 BST”,”blockFirstPublished”:1752491214000,”blockFirstPublishedDisplay”:”12.06 BST”,”blockFirstPublishedDisplayNoTimezone”:”12.06″,”title”:”French 30-year bond yields highest since 2011″,”contributors”:[],”primaryDateLine”:”Mon 14 Jul 2025 15.19 BST”,”secondaryDateLine”:”First published on Mon 14 Jul 2025 06.45 BST”},{“id”:”6874dd288f08a97237f2e5a0″,”elements”:[{“displayCredit”:true,”_type”:”model.dotcomrendering.pageElements.ImageBlockElement”,”role”:”inline”,”media”:{“allImages”:[{“index”:0,”fields”:{“height”:”2907″,”width”:”4252″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/4252.jpg”},{“index”:1,”fields”:{“isMaster”:”true”,”height”:”2907″,”width”:”4252″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg”},{“index”:2,”fields”:{“height”:”1367″,”width”:”2000″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/2000.jpg”},{“index”:3,”fields”:{“height”:”684″,”width”:”1000″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/1000.jpg”},{“index”:4,”fields”:{“height”:”342″,”width”:”500″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/500.jpg”},{“index”:5,”fields”:{“height”:”96″,”width”:”140″},”mediaType”:”Image”,”mimeType”:”image/jpeg”,”url”:”https://media.guim.co.uk/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/140.jpg”}]},”elementId”:”ca1375d7-f859-4ff2-b797-315280c5d5a1″,”imageSources”:[{“weighting”:”inline”,”srcSet”:[{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=620&quality=85&auto=format&fit=max&s=2de747aedcd1240357e43d9796ab3efc”,”width”:620},{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=620&quality=45&auto=format&fit=max&dpr=2&s=a0dea8fa975f61a4fe738f1855c82b92″,”width”:1240},{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=605&quality=85&auto=format&fit=max&s=1feb8c6897c69bb4287ca37b7aa2f15e”,”width”:605},{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=605&quality=45&auto=format&fit=max&dpr=2&s=29caee73a2a5dc455292dce45e6ff222″,”width”:1210},{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=445&quality=85&auto=format&fit=max&s=ce6fb9f780dafab8918c8ad90f046609″,”width”:445},{“src”:”https://i.guim.co.uk/img/media/dc0306ee39e2c77d42549ac1e8876a0b3e8689c8/0_0_4252_2907/master/4252.jpg?width=445&quality=45&auto=format&fit=max&dpr=2&s=558a30ae88d911c438c1fecb059e821f”