If you’re juggling a side hustle, struggling to keep up with ever-decreasing pay rates, or just need a little lift after a long day, you’re in the right place. So, grab a coffee (or something stronger, no judgment), take a deep breath, and enjoy a positive five-minute read.

I don’t think I need to tell you that last month, the Bank of England cut its base rate to 4.5%. Hardly a shocker, as this was widely predicted in the lead-up to the decision. But the question on everyone’s lips now is—was this just the beginning of a series of rate cuts? Let’s dig into some of the factors that might give us a clue.

The Decision and the Dissenters

The vote wasn’t unanimous. Seven members backed the cut to 4.5%, but two wanted an even bolder move, pushing for 4.25%. Does that hint at further cuts in the pipeline? Possibly.

Inflation—The Elephant in the Room

The last official Consumer Price Index (CPI) reading before the rate cut showed inflation at 2.5% in late 2024. So far, so good. But then along came January’s figures, which saw inflation unexpectedly jump to 3.0%. What’s to blame? Transport, food, and non-alcoholic beverages (so yes, your weekly shop is still feeling the squeeze).

The Bank had already warned us that inflation could creep up to 3.7% by autumn 2025, thanks to global energy costs and regulatory price changes. But did they anticipate it rising so soon? Probably not. That said, their broader outlook remains that inflation pressures will ease through the year, with CPI inflation expected to settle back to 2% by the end of 2025. Whether that forecast holds up in the wake of recent numbers—well, that’s anyone’s guess.

Growth Forecasts—Slow and Steady Wins the Race?

The Bank reckons GDP growth will start picking up mid-year, but they’ve also revised down their estimates of how much the economy can actually produce. So yes, there’s been a slowdown in demand, but they don’t believe there’s a massive surplus of untapped economic potential. And that gave them the confidence to trim the rate to 4.5%.

More Cuts on the Horizon?

The official line is that any future reductions will be done with ‘gradual and careful’ consideration (so don’t hold your breath for a free-fall in rates). They’re keeping a wary eye on economic demand, supply issues, and, of course, inflation trends.

Then there’s the wider economic picture. Recent trade tariff announcements in the US have sparked a bit of financial market turbulence, with retaliatory measures likely. The Bank has acknowledged the uncertainty this brings, which means they’re likely to tread even more cautiously before making their next move.

So, where does that leave us? Well, if there’s one thing that’s certain, it’s uncertainty. Rate cuts may be on the table, but whether they come thick and fast or in slow, measured steps depends on how the economic dice roll over the coming months.

Should You Be Paying Tax on Your Side Hustle?

Times are tough, and let’s face it—many people are making a little extra on the side. Whether it’s selling homemade crafts, tutoring, or even making money from social media, the big question remains: do you need to tell HMRC? And more importantly, do you need to pay tax?

HMRC’s latest guidance breaks down side hustles into five categories. Let’s take a quick look:

Buying or Making Things to Sell

• If you’re flipping items for a profit or selling handmade goods, HMRC considers you to be trading.

Side Gigs

• Whether it’s dog walking, car repairs, or delivering food, if it’s regular and ongoing, it counts as trading.

Multiple Jobs, One Person

• Juggling multiple self-employed gigs? That likely makes you a sole trader.

Content Creators & Influencers

• If you’re raking in cash from sponsored posts or ad revenue, HMRC sees it as a business.

Renting Out Property

• If you rent a spare room, you may qualify for the £7,500 Rent a Room Scheme. If it’s a separate property, the £1,000 property allowance might apply.

The magic number to remember? £1,000. If you earn under this from trading, you don’t need to pay tax. Earn more? Then it’s time to have a chat with HMRC (or your accountant) to avoid any nasty surprises.

Economic Growth—The Chancellor’s Big Plans

Rachel Reeves recently took to the stage to outline the government’s economic growth strategy. And surprise, surprise, a lot of it revolves around infrastructure and investment. Here are some key takeaways:

• Oxford-Cambridge Growth Corridor: The government wants to turn this area into Europe’s Silicon Valley, with transport improvements, housing developments, and even an AI Growth Zone in Culham.
• Heathrow’s Third Runway: The project is getting a fresh push, with the government looking at proposals this summer. If it goes ahead, it could add 0.43% to GDP and create 100,000 jobs.
• Wider Economic Plans: From employment law tweaks to regulatory reforms and pensions overhauls, there’s a lot on the agenda. The National Wealth Fund is also stepping up investment in infrastructure and business growth.

Keeping Morale Up in Tough Economic Times

With businesses facing cost hikes, staff cuts, and general uncertainty, it’s easy to feel pessimistic. But how can you and your team stay motivated? Here are five ways to keep spirits high:

Resilience Matters

• Tough times come and go. Focus on past challenges you’ve overcome—it’ll remind you that you can handle whatever’s next.

Spot the Wins

• Even small victories are worth celebrating. Keep an eye on what’s going well, and use it as motivation.

Be Transparent

• Honest conversations with your team build trust and keep morale from sinking.

Embrace Innovation

• If things are changing, look for new ways to adapt. Necessity, as they say, is the mother of invention.

Keep the Bigger Picture in Mind

• Downturns don’t last forever. The businesses that keep a long-term focus tend to come out stronger.

And Finally… A Little Perspective

With all this economic uncertainty, you might be wondering what the future holds. Will rates tumble further? Will inflation behave itself? Will anyone ever successfully cancel their gym membership without a 12-step legal battle?

One thing’s for sure—no matter what happens with the economy, your morning coffee will still feel overpriced, the British summer will remain as unpredictable as ever, and at least one person reading this will still manage to trip over a rogue pavement slab this week.

So, while the financial outlook may be unclear, remember: resilience (and a decent cup of tea) will get you through just about anything.

Categories: Positive Accountant