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The Trade Union Congress (TUC) has called on the Bank of England to “go further and faster” with interest rate cuts as the cost-of-living crisis continues to squeeze household incomes.
Its call comes after GDP grew by only 0.1% in the three months to December 2025 and 0.1% into December 2025.
The subdued growth was attributed to slowing consumer demand, which grew by 1.0% in 2025 after falls in 2023 and 2024, but slowed to 0.2% in Q4.
TUC General Secretary Paul Nowak said ministers must stay “laser-focused” on improving living standards this year in a bid to boost spending, adding that the “doom loop must end”.
Nowak said: “It’s welcome that the economy kept growing in December, and last year’s growth of 1.3% was the strongest for three years. But many workers are not yet feeling the benefit in their pockets. Household incomes are still being squeezed by a relentless cost-of-living crisis.
“Many working families don’t have any money left over to spend on the things that keep our economy moving – meals out, shopping on the high street, and family days out. That’s bad for families and bad for the wider economy.”
He added: “This doom loop must end. Ministers must stay laser-focused on cutting working people’s household costs and improving living standards this year. And the Bank of England must go further and faster with quickfire interest-rate cuts in the months ahead.
“Britain needs to finally move on from the cost-of-living crisis that’s kept us stuck for too long – the priority must be helping families to spend and businesses to invest.”
Earlier this month, the Bank of England voted to hold interest rates steady at 3.75%, after inflation rose in December.
In December, the bank had voted to cut rates from 4% to 3.75%, the lowest the level it had been since February 2023, and marking the fourth rate cut made that year. The cut came as UK inflation slowed more than expected to 3.2% in November.
However, inflation increased to 3.4% in December, slightly higher than economists expected, driven up by food costs, and the prices of tobacco and airfares.
