August 2024 marked a significant shift in the UK's monetary policy, as it saw the first reduction in the official bank base interest rate since August 2023. This change came after a period of consistent rate hikes that began in late 2021. In a bid to minimize the economic effects of the COVID-19 pandemic, the Bank of England cut the official bank base rate in March 2020 to a record low of *** percent. This historic low came just one week after the Bank of England cut rates from **** percent to **** percent in a bid to prevent mass job cuts in the United Kingdom. It remained at *** percent until December 2021 and was increased to one percent in May 2022 and to **** percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching **** percent in August 2023. It wasn't until August 2024 that the first rate decrease since the previous year occurred, signaling a potential shift in monetary policy. Why do central banks adjust interest rates? Central banks, including the Bank of England, adjust interest rates to manage economic stability and control inflation. Their strategies involve a delicate balance between two main approaches. When central banks raise interest rates, their goal is to cool down an overheated economy. Higher rates curb excessive spending and borrowing, which helps to prevent runaway inflation. This approach is typically used when the economy is growing too quickly or when inflation is rising above desired levels. Conversely, when central banks lower interest rates, they aim to encourage borrowing and investment. This strategy is employed to stimulate economic growth during periods of slowdown or recession. Lower rates make it cheaper for businesses and individuals to borrow money, which can lead to increased spending and investment. This dual approach allows central banks to maintain a balance between promoting growth and controlling inflation, ensuring long-term economic stability. Additionally, adjusting interest rates can influence currency values, impacting international trade and investment flows, further underscoring their critical role in a nation's economic health. Recent interest rate trends Between 2021 and 2024, most advanced and emerging economies experienced a period of regular interest rate hikes. This trend was driven by several factors, including persistent supply chain disruptions, high energy prices, and robust demand pressures. These elements combined to create significant inflationary trends, prompting central banks to raise rates in an effort to temper spending and borrowing. However, in 2024, a shift began to occur in global monetary policy. The European Central Bank (ECB) was among the first major central banks to reverse this trend by cutting interest rates. This move signaled a change in approach aimed at addressing growing economic slowdowns and supporting growth.

United Kingdom Credit Cond: CL: L3: Loss from the Default: Large PNFCs data was reported at -4.000 % Point in Sep 2018. This records a decrease from the previous number of 1.100 % Point for Jun 2018. United Kingdom Credit Cond: CL: L3: Loss from the Default: Large PNFCs data is updated quarterly, averaging 0.000 % Point from Jun 2007 (Median) to Sep 2018, with 46 observations. The data reached an all-time high of 46.900 % Point in Dec 2008 and a record low of -23.900 % Point in Sep 2014. United Kingdom Credit Cond: CL: L3: Loss from the Default: Large PNFCs data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.KB020: Credit Conditions Survey: Corporate Lending: Last 3 Months.

Companies in the Investment Banking industry provide financial advisory services, offering their insight on IPOs, M&As and equity and debt security underwriting activity. Competition has been fierce in recent years, with a flood of boutique firms entering the industry as bankers look for healthier rewards than those offered by the more regulated larger investment banks. Growing M&A and IPO activity before 2022-23 ramped up demand for investment banking services, although this momentum lost speed in 2022-23 as access to cheap capital ended. Revenue is expected to contract at a compound annual rate of 8.1% over the five years through 2025-26 to £8 billion, including an expected drop of 0.5% in 2025-26. Profit is also expected to edge downwards in 2025, though it remains high. Capital market activity surged at the height of the COVID-19 pandemic, lifting demand for investment banking services as governments and large international businesses across the world raised capital to fund fiscal stimuli and maintain cash flow levels. The boom in debt and equity markets showed no sign of slowing the next year, with IPO and M&A activity reaching record levels in 2021-22, driving demand for investment bankers’ services. However, in the two years through 2023-24, M&A activity plummeted thanks to rising interest rates, mounting geopolitical tensions and a gloomy economic outlook, which put companies off from seeking takeovers. In 2024-25, M&A activity fared better than IPOs, welcoming improvements in consumer confidence amid interest rate cuts, aiding revenue growth. However, IPOs continued on their downward trajectory as geopolitical uncertainty and high interest rates resulted in many companies delaying listings. Over 2025-26, M&A activity is forecast to continue to climb, but IPO activity may stall as Trump's tariff announcements erode investor sentiment, weighing on revenue growth. Revenue is anticipated to grow at a compound annual rate of 4.5% over the five years through 2030-31 to £10 billion. Deal activity is set to build as lower interest rates make leveraged transactions more attractive. Competition will remain fierce, driving technological innovation as investment banks try to improve decision-making processes and scale operations through the use of AI. Still, strong competition from overseas exchanges, like the S&P 500 in the US, will dent UK IPO activity in the coming years as companies move away from UK listings and the lacklustre valuations they offer, weighing on revenue growth.

United Kingdom UK: Bank Non-Performing Loans to Total Gross Loans data was reported at 0.813 % in 2017. This records a decrease from the previous number of 0.940 % for 2016. United Kingdom UK: Bank Non-Performing Loans to Total Gross Loans data is updated yearly, averaging 2.383 % from Dec 2008 (Median) to 2017, with 10 observations. The data reached an all-time high of 3.962 % in 2011 and a record low of 0.813 % in 2017. United Kingdom UK: Bank Non-Performing Loans to Total Gross Loans data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United Kingdom – Table UK.World Bank.WDI: Bank Loans. Bank nonperforming loans to total gross loans are the value of nonperforming loans divided by the total value of the loan portfolio (including nonperforming loans before the deduction of specific loan-loss provisions). The loan amount recorded as nonperforming should be the gross value of the loan as recorded on the balance sheet, not just the amount that is overdue.; ; International Monetary Fund, Global Financial Stability Report.; Median;

Online banking usage in the UK increased steadily between 2007 and 2023. In 2007, around one third of the adult British population used online banking, which increased up to 87 percent in 2023. Banking and financial services are typically among the first industries to embrace technological advances; starting as far back in time as the appearance of automated teller machines (ATMs) and credit cards. Ever since the first secure Internet systems for financial operations became available on a large scale, accessing of one's bank account online to carry out transactions, pay off credit cards, establish credit lines or invest savings became one of the fastest growing areas of Internet activities. Leading online banks in the UK There are several online banks headquartered in the UK, including Revolut, Monzo, Starling, Monese, and Atom Bank. As of 2024, Monzo was the most well-known, popular, and used online bank, followed by Starling and Revolut. Established in 2015, Monzo is one of a growing number of disruptor or challenger banks which run accounts online through mobile apps. Online banking in Europe Across Europe, online banking penetration varied greatly by country in 2024. Nordic countries all had online banking penetration rates of over 90 percent. In stark contrast, Albania and Montenegro had penetration rates lower than 15 percent.

Since 2014, ************* has maintained its position as the UK banking sector leader by annual revenue. In 2024, **** generated approximately ***** billion British pounds in revenue. Barclays PLC ranked second with ***** billion British pounds in revenue for the same year. The five largest UK banks showed varied performance in 2024, with HSBC, Barclays, and Standard Chartered all experiencing revenue growth, while Lloyds Banking Group and NatWest Group reported slight decreases in revenue.

The yield on United Kingdom 10Y Bond Yield rose to 4.60% on August 8, 2025, marking a 0.05 percentage point increase from the previous session. Over the past month, the yield has fallen by 0 points, though it remains 0.65 points higher than a year ago, according to over-the-counter interbank yield quotes for this government bond maturity. UK 10 Year Gilt Bond Yield - values, historical data, forecasts and news - updated on August of 2025.

As of December 2024, all United Kingdom government debt securities were returning positive yields, regardless of maturity. This places the yield of both UK short term bonds and long term bonds above that of major countries like Germany, France and Japan, but lower than the United States. What are government bonds? Government bonds are debt instruments where a certain amount of money is given to the issuer, in exchange for regular payments of interest over a fixed period. At the end of this period the issuer then returns the amount in full. Bonds differ from a regular loan through how they can be traded on financial markets once issued. This ability to trade bonds makes it more complex to measure the return investors receive from bonds, as the price they buy a bond for on the market may differ from the price the same bond was initially issued at. The yield is therefore calculated as what investors can expect to receive based on current market prices paid for the bond, not the value it was issued at. In total, UK government debt amounted to over 2.4 trillion British pounds in 2023 – with the majority being comprised of different types of UK government bonds. Why are inverted yield curves important? UK government bond yields over recent years have taken on a typical shape, with short term bonds having a lower yield than bonds with a maturity of 10 to 20 years. The higher yield of longer-term bonds compensates investors for the higher level of uncertainty in the future. However, if investors are sufficiently worried about both a short term economic decline, and low long term growth, they may prefer to purchase short term bonds in order to secure assets with regular interest payments in the here and now (as opposed to shares, which can lose a lot of value in a short time). This can lead to an inverted yield curve, where shorter term debt has a higher yield. Inverted yield curves are generally seen as a reliable indicator of a recession, with inverted yields occurring before most recent U.S. recessions. The major exception to this is the recession from the coronavirus pandemic – but even then, U.S. yield curves came perilously close to being inverted in mid-2019.

United Kingdom UK: Refugee Population: by Country or Territory of Asylum data was reported at 118,913.000 Person in 2016. This records a decrease from the previous number of 123,067.000 Person for 2015. United Kingdom UK: Refugee Population: by Country or Territory of Asylum data is updated yearly, averaging 148,922.000 Person from Dec 1990 (Median) to 2016, with 27 observations. The data reached an all-time high of 303,181.000 Person in 2005 and a record low of 43,371.000 Person in 1991. United Kingdom UK: Refugee Population: by Country or Territory of Asylum data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s UK – Table UK.World Bank: Population and Urbanization Statistics. Refugees are people who are recognized as refugees under the 1951 Convention Relating to the Status of Refugees or its 1967 Protocol, the 1969 Organization of African Unity Convention Governing the Specific Aspects of Refugee Problems in Africa, people recognized as refugees in accordance with the UNHCR statute, people granted refugee-like humanitarian status, and people provided temporary protection. Asylum seekers--people who have applied for asylum or refugee status and who have not yet received a decision or who are registered as asylum seekers--are excluded. Palestinian refugees are people (and their descendants) whose residence was Palestine between June 1946 and May 1948 and who lost their homes and means of livelihood as a result of the 1948 Arab-Israeli conflict. Country of asylum is the country where an asylum claim was filed and granted.; ; United Nations High Commissioner for Refugees (UNHCR), Statistics Database, Statistical Yearbook and data files, complemented by statistics on Palestinian refugees under the mandate of the UNRWA as published on its website. Data from UNHCR are available online at: www.unhcr.org/en-us/figures-at-a-glance.html.; Sum;

The ratio of provisions to non-performing loans (NPL) in the United Kingdom fell slightly in 2023. However, the value of those provisions were still much lower than in 2020. The provisions used by banks to cover potential losses amounted to over half of the value of their non-performing loans in 2023. This measure peaked in 2015 when the value of the provisions was higher than that of all NPLs in the UK.