TUC calls on the Bank of England to “go for growth” – as new analysis shows British shoppers aren’t spending

• Following new GDP figures showing the UK economy grew at just 0.1% in the three months to December 2025, the TUC is calling for the Bank to lower interest rates, arguing that it is possible to “go for growth” without risking runaway inflation.
• As new ONS figures show consumer demand slowed to 0.2% in Q4, new analysis by the TUC suggests a key feature of the UK’s growth problem is a lack of consumer demand – our shoppers don’t have the money or confidence to spend.
• The UK is languishing near the bottom of consumer spending internationally – ranking 32 out of 36 OECD countries over the last three years.  
• To turn the “doom loop” into a “boom loop” we need to tackle to cost of living and boost confidence, giving people more disposable income to spend in shops and high streets and businesses and building trust that there are better times to come.  

Following new GDP figures, which show the UK economy grew at only 0.1% in the three months to December last year, the Trades Union Congress is today calling on the Bank of England to  “go for growth” and embark on a sequence of rates cuts - going further and faster in 2026 than they did last year.  

New analysis shows Britain’s consumer spending is low by international standards and in general countries with higher consumer spending have higher GDP growth. At the same time, the fastest growing economies have below average inflation. The TUC says this means Bank has room to deliver “quick fire cuts” to boost growth, without necessarily risking runaway inflation. Not doing so risks continued stagnation.  

The TUC says the priority should be boosting consumer spending, growth and living standards, and that the economy is being held back by restrictively high interest rates. Last year, the Bank was “overly cautious and too slow to act” while the cost-of-living crisis continued to hammer households and firms. Inflation is now widely understood to be on a downward trend, and holding interest rates at such high rates is overcompensating for inflation risks while putting the economy under excessive pressure.  

Growth problem is rooted in consumer demand  

New TUC analysis published today reveals that the UK is languishing near the bottom of consumer spending internationally – ranking 32 out of 36 OECD countries over the last three years - 0.1% growth in UK consumer demand compares to 8.4% in the US, and 4.1% across the OECD.  

This correlates with weak UK GDP growth at 2.7% over the same period – ranking 25 out of 37. US GDP growth was 8.6% and the OECD 4.1%

Concerningly, while consumer spending has generally accounted for around two thirds of GDP growth since the financial crisis, over the last two years it has made no contribution at all.  

The UK continues to face a cost-of-living crisis. Fourteen years of Conservative government created an economic ‘doom loop’. The Tories slashed public spending and caused low growth, which worsened public finances and led to more cuts.  

These policies created our current living standards crisis. Real wages flatlined for more than a decade. Now two thirds of people say their finances are stagnating or getting worse.

The TUC warns the austerity-era government spending problem has become a consumer spending problem as too many people can’t afford to spend in shops, restaurants or invest in their businesses.

Growth is the government’s number one mission – fuelling more jobs, higher tax take to fund public services and growing living standards.

The Labour Government has taken some important steps in the right direction, passing the Employment Rights Act – the biggest upgrade in workers’ rights in a generation, raising the minimum wage, freezing rail fares and investing in public services. But the scale of the hill to climb means much more is needed.  

Consumer spending is being held back by the Bank  

The TUC argues today that consumer spending is being held back by the Bank of England, who have been overly cautious on lowering interest rates and must go further and faster.  

While some economists remain concerned about inflation, TUC analysis finds this link is far from clear. On average, better growth does not mean countries are paying the price on higher inflation. The five countries with the highest growth – Costa Rica, Ireland, Spain, US and Portugal - have inflation below the OECD average. In addition, three of the five slowest growing countries (Estonia, Hungary and Austria) have above average inflation.  

The TUC argues that these high growth-high inflation economies show it is possible to do both. At the moment, the UK is losing on both fronts, with below average growth and above average inflation, in fact only Estonia and Hungary do worse on both.  

Meanwhile, the risks of continued poor growth and living standards have been under appreciated. Without higher incomes and spending, consumer demand is being held back which is hitting growth – damaging our economy in the present and the future. This is feeding a wider lack of confidence in future prospects, which also affects investment by firms.  

Independent members of the Monetary Policy Committee, Doctor Swati Dhingra and Professor Alan Taylor, have both recognised this risk, noting that inflationary pressures have faded, and weak household spending looks set to continue.  

TUC General Secretary Paul Nowak said:  

“The cost-of-living crisis is the number one issue facing the British people right now.  

“The Bank of England has a crucial role to play here. Last year they were overly cautious and too slow to act. They should go for growth with a sequence of quick-fire cuts this year.

“Lower interest rates would help households and help the high street – putting money in people’s pockets to spend in shops and restaurants, and boosting confidence for consumers and for businesses.  

“Just look at similar economies, who have boosted spending power and boosted growth, all while keeping inflation under control.”

ENDS