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The £500 Billion Reason UK Interest Rates Are Going Below 3%

Noise Cancelling with Neil Woodford

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UK Economy | UK Interest Rates | Inflation | Why Rates Could Fall Below 3%

Neil Woodford says UK interest rates are heading below 3% next year, and the new Prime Minister has almost nothing to do with it. The consensus says Britain has a structural growth problem. The data says something different: the UK economy is waiting on one number.

In this episode, we explain who actually buys Britain. Households account for roughly 60p of every pound of UK GDP, and since the pandemic, they have been saving at nearly double the American rate. British banks now hold over £500 billion more in deposits than they have lent out. That savings mountain, not Westminster rhetoric, is what decides whether Britain grows.

Neil explains why the Bank of England's sticky inflation fears have been wrong all year, why the household savings ratio is the single most important number in the UK economy, and where inflation and interest rates land over the next 12 months. Plus: the sectors that look mispriced if he's right, and the data releases that would confirm the view or kill it.

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⏱ CHAPTERS
00:00 Rates are heading below 3%
01:38 The new prime minister's empty promise
03:47 The four buyers of Britain
09:20 The £500 billion cash mountain
15:55 Why America grew and Britain didn't
22:09 The Bank of England got it wrong
27:22 Neil's 12-month rate call
34:31 What it means for your money
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🔗 Links & Resources
Neil's full written analysis: https://www.noisecancelling.co/read/w...
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About The Noise Cancelling Podcast

Weekly analysis of the UK economy and markets that cuts through the noise. Neil Woodford has run money for over 35 years, while Jon Adair asks the questions everyone else is thinking.

Hosts: Neil Woodford, Jon Adair
Subscribe: ‪@NCwithNW‬

📩 Join Noise Cancelling (Free): Get every new episode plus The Weekly newsletter every Friday: https://www.noisecancelling.co

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⚠️ Disclaimer: This video is for educational and informational purposes only and does not constitute financial or investment advice. Always do your own research before making financial decisions.

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#UKEconomy
#InterestRates
#UKInflation
#EconomicGrowth
#PersonalFinanceUK

20 Comments

@NCwithNW Creator 2 months ago Pinned

If you’d like to help beta test the new Noise Cancelling Android app let us know. iPhone app in the App Store already!

@milkyporridge5929 2 months ago

Someone tell Neil mortgage rates aren’t just based on inflation expectations

@evilzzzability 2 months ago

Some people may be willing to lend the UK Government money at 3%... I certainly won't.

@drex6476 2 months ago

After locking his investors out of his fund & access to their own money (while still taking his fund manager's fees), Neil Woodford giving his opinion on economy, finances & savings is like hyenas advising the rest on vegetarianism! Watch out people, he's coming for your money again!

@Rubadeez-Nutz 2 months ago

10Y Gilt Yields are going to 8%. We are Bongo Bongo Land now

@Alex.Jenkinson 2 months ago

Counter theory would be that the massive cash pile is being saved by the richest households, after the massive redistribution that took place during covid. Once interest rates drop (i'm literally betting they will) those rich households will take the cash out of the bank and buy assets with it. No increase in consumption is guaranteed because those with a high marginal propensity to consume haven't got the money. If they did, they would have already spent it.

@CodenameKolibri 2 months ago

The gov. keeps public in suspense over taxes is causing lack of confidence

@MrRotepod 2 months ago

It’s not surprising. If you are run by clueless, fear mongering, incompetent people, you are going to hoard!

@nicholaspostlethwaite9554 1 month ago

Man is Completely Wrong on housing!
Planning is rigged always to be granted. Consent is assumed! ALL parties LIE that there is any problem getting it, very sadly.
It should be a Capital Offence to build, or grant permissions to build, on ANY green space.
Interest rates are half what they should be!
Bank lending is profligate and bad. The Bank of England admitted a while back their Policies cause house prices! NOT demand. The bad attitudes over lending too much, too high multiples of pay, too easily, and at too low rates.

@Christ-on-a-Bike 2 months ago

Burnham is just handing out sweeties to soften everybody up for big tax rises.

@Andrew_McP 2 months ago (edited)

The wisdom of crowds means nothing. Right up to the point where it means something.

@gary1120 2 months ago

People are simply worried about cost of heating their homes, fuelling cars and buying groceries.....its not rocket science, they are prepping for heat, fuel and food.

@jimsyoutubechannel6818 1 month ago

Fantastic video.

@robertobee3198 2 months ago

No mention of the syphoning of wages to foreign countries by millions of foreign workers, while the British people who should be doing these jobs are all being subsidised by the taxpayer.

@jamesgould7373 2 months ago

I will save this video and visit it this time 2027. Let’s see if rates are 3%

@GaryMinns-l8f 2 months ago

Thanks Chaps. Glad you are back - my Fridays were missing something for a few weeks!

@Markdmarque 2 months ago

The Government "Scaremongering" is making people nervous about their finances and they have tightened their belts.We don't NEED all these products!!!!...

@ronaldford8527 2 months ago

No chance, the country is 2 trillion in debt, we are over 100 pet cent debt to gdp. The inflation numbers are fake as hell.

@Gareth-d4v 1 month ago

I agree that the welter of doom and gloom pretty much every time you turn on the tv, or look at YouTube, can only induce people to hang on to their money. Also the point Neil made in another video that the UK is doing better then the 'standard narrative' rings true. In my neck of the woods, Oxfordshire and surroundings to the north, I see no evidence on the ground that I am living in 'Broken Britain', quite the contrary. Neil makes the point that the government should reduce borrowing. Where would institutions - pension funds, insurance companies and the like - who need safe and liquid stores of wealth, place their funds? If buying government bonds in the quantities that they prefer now is big enough to be problematic, then what will be the impact of that demand for that particular level safety and liquidity if it cant be satisfied by government debt? I think in general if we say don't do something then we also have to look at and plan for the ramifications that follow from not doing it.