BBoE MPC member Alan Taylor, one of the committee’s most dovish voices, warned that the U.K. economy faces a “preponderance of downside risks” as growth slows and labor market slack widens.
In a speech today, he said output has fallen below potential, confidence among firms and households remains weak, and the trend of disinflation continues to deepen. Wage settlements are now expected to end the year around 3–3.5%, moving lower into 2026 — a sign, he argued, that “wage-led domestic inflation will not re-kindle an upward spiral.”
Taylor also pointed to global trade dynamics as a growing disinflationary force. He noted that U.K. import prices, particularly from Europe, have been falling for several years and are likely to decline further as “trade diversion” accelerates — a process through which supply chains shift across regions, increasing competition and reducing goods prices.
While acknowledging that the 2025 inflation hump and moderate expectations pose some upside risk, Taylor said these should fade by early 2026 as earlier tax and administered price effects roll off. With inflation fundamentals softening and external price pressures subsiding, he maintained that the balance of risks justifies a lower path for Bank Rate, consistent with his repeated dissents at recent MPC meetings.
