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The mood around UK business has ranged from cautious to desperate in the past few months as the economy battles inflation, tax grabs, rising labour costs and the prospects of US tariffs.
Add in constant political pressures giving a bleak outlook and the stock market plummeting in early April on the back of those tariffs, and UK plc could be forgiven for thinking 2025 might become a year to forget.
But perhaps all is not as bad as it was beginning to appear, with some important signs giving relief and optimism to some businesses who got a share price backing boost thanks to the world’s biggest investor, BlackRock, building stakes in multiple companies.
And the most imminent boost will be a cut to interest rates.
The Bank of England meets on 8 May and a 0.25 per cent cut appears all but guaranteed at this stage. And back-to-back rates cuts are entirely possible, bringing the Bank Rate down to 4 per cent by summer.
It would be the first time since March 2023 that the interest rate returns to that level, easing costs for business owners with debt and perhaps allowing more consideration to investment on projects and other spending which could spark opportunities for the growth the economy desperately needs.
Some businesses already look well-positioned to capture that growth, believes Larry Fink, chief executive at BlackRock.
“[The company has] allocated more capital back to the UK tactically now with the belief that in the short run, the new administration is trying to tackle some of the hard issues,” Mr Fink toldThe Times. “I think the prime minister is articulating the needs of what we have to do. I have more confidence in the UK economy today than I did a year ago.”
Pointing to some of the financial institutions that had seen their share price hammered this year as the FTSE 100 dropped along with other major stock markets, Mr Fink explained how BlackRock had taken stakes in different sectors in the belief the selloff was overdone.
“So many of the UK stocks discounts were too deep, especially like in the banking system. Look at the rebound in the valuations of NatWest and Lloyds and how they bounced. We added to our positions across the board with the idea that we believe the market was discounting too much negativity. And we believe the negativity was probably not warranted,” he said.
Having seen a significant drop from 3 April onwards, the FTSE 100 - the biggest firms on the London Stock Exchange - have bounced back somewhat and now remain up more than two per cent since the start of 2025, even if they have collectively not reached March’s high points.