The Bank's decision comes at a delicate moment for the UK economy, which has been grappling with uneven growth, stubborn price pressures and weakening consumer confidence.
Nearly half of firms (48%) expected turnover to grow over the next 12 months in the first quarter of the year, up from 42% in the final quarter of 2025.
Ongoing conflict in the Middle East continues to disrupt global markets and oil prices, adding a persistent layer of uncertainty for UK firms. This geopolitical instability is driving higher cost pressures and intensifying concerns around supply chains and energy security, all of which are critical factors in strategic business decision making.
The US-Israeli war on Iran has already led to hundreds of deaths, created an ecological crisis linked to strikes on oil depots and sent fossil fuel prices haywire across the globe. Critics say the war also shows the inherent instability of dependence on oil and gas: unlike wind and solar power, fossil fuel-based energy requires constant inputs of products whose availability and costs are determined by the global market.
The year we are leaving behind has been plagued from the start by a series of social, economic, environmental, technological and institutional challenges, all happening with such speed and intensity that we are yet to fully comprehend their impact on our lives, let alone on future generations. As the overwhelming strain of domestic and geopolitical changes continues to build up, I cannot help but remember the man's words. Too much pressure. Unstable, uncertain and replete with deep inequalities.
The old world is dying, Antonio Gramsci once wrote. And the new world struggles to be born. In such interregnums, the Italian Marxist philosopher suggested, every act, even the smallest, may acquire decisive weight. In 2025, western leaders appeared convinced they and we were living through one such transitional period, as the world of international relations established after the second world war crashed to a halt.