Bank of England Holds Base Rate at 3.75% - What It Means for UK Businesses
- David Manklow
- 25 minutes ago
- 2 min read
The Bank of England has confirmed its decision to hold the base interest rate at 3.75% in its first monetary policy meeting of 2026, keeping borrowing costs steady for now. This follows a series of cuts over the past 18 months, bringing the rate down from levels above 5% in 2024.
Why the Rate Remains Unchanged
The Bank’s Monetary Policy Committee (MPC), responsible for setting the base rate, voted by a narrow 5-4 majority to keep the rate on hold.
With inflation still above the Bank’s 2% target (most recently 3.4% in December 2025), policymakers opted for caution, ensuring that price growth continues on a sustainable downward path before making further moves.
While inflation has fallen significantly from its recent peak, the central bank wants to be confident that this trend is enduring.
Holding rates gives the MPC more time to assess whether inflationary pressures, including wage growth, are genuinely easing without sparking new price pressures.
What This Means for Businesses
For businesses, a stable base rate can have both positive and practical implications:
Borrowing costs remain predictable, lenders often price their loans based on the base rate, so a period of stability can help businesses plan finance strategies with greater confidence.
Investment decisions can be better timed, knowing that interest rates are steady allows business owners to assess investment opportunities, cashflow forecasts and expansion plans without worrying about immediate rate hikes.
Mortgage and loan rates continue to reflect recent cuts, although commercial lenders set their own rates, many business loan and mortgage products are influenced by the base rate, meaning costs may remain relatively competitive.
Looking ahead, many economists expect future base rate cuts may be possible later in 2026, particularly if inflation continues to ease and economic growth remains subdued, potentially creating an even more supportive borrowing environment for businesses.
Why Now Is a Good Time to Explore Finance Options
While the base rate remains at 3.75%, we’d encourage business owners not to wait to explore their borrowing and finance options. With market conditions relatively stable and lenders offering a range of flexible business finance solutions, now could be an ideal time to look at:
Business loans to fund growth or working capital
Asset finance to support equipment investment and expansion
Property finance for commercial property purchase or refinancing
Motor finance for fleet upgrades or vehicle purchases
Whether you’re planning investment, managing cash flow, or looking to refinance existing facilities, our experienced Approved Finance Group broker team can help you understand the options available, tailor the right solution to your business needs, and guide you through the process with confidence.
Get in touch today to discuss your finance options and see how we can help your business thrive in 2026 and beyond.
