The UK's financial sector is facing increased scrutiny on two major fronts: persistent IT failures within banks and building societies, and concerns about the pace of potential interest rate cuts amidst "sticky" inflation. Recent reports from MPs and warnings from the Bank of England highlight the challenges facing both institutions and consumers.
IT Outages Plague Banks, Costing Millions
A recent inquiry by the House of Commons’ Treasury committee has revealed a concerning trend: major banks and building societies in the UK have suffered the equivalent of over a month's worth of IT failures in the last two years. These disruptions, stemming from 158 separate IT incidents, have affected millions of customers. The committee found that nine of the top banks and building societies experienced at least 803 hours of unplanned tech and systems outages between January 2023 and February 2025.
The consequences of these failures are significant. "Customers at Britain’s major banks and building societies suffered the equivalent of more than one month’s worth of IT failures in the last two years," MPs have stated. Millions of pounds in compensation are expected to be paid out to affected customers due to widespread service outages.
The frequency and duration of these IT incidents raise serious questions about the resilience and reliability of the IT infrastructure underpinning the UK's banking system. Further investigation and investment in infrastructure may be necessary to prevent future disruptions.
Inflation Concerns Delay Interest Rate Cuts
Adding to the financial uncertainty, the Bank of England has cautioned against expectations of rapid interest rate cuts. Huw Pill, the Bank's chief economist, recently told MPs that interest rates might not fall as quickly as hoped due to persistent inflationary pressures. He emphasized that there is still "more work to do" to tackle price pressures.
Pill also highlighted "substantial" risks stemming from ongoing global trade tensions, particularly those associated with potential trade wars. These external factors could further complicate the Bank's efforts to manage inflation and influence interest rate policy.
The Bank's stance suggests that consumers and businesses should prepare for a potentially prolonged period of higher interest rates. This could impact borrowing costs, investment decisions, and overall economic growth.
A Complex Economic Landscape
The combination of bank IT failures and inflationary pressures creates a complex and challenging economic landscape for the UK. While efforts are underway to address both issues, the path forward remains uncertain. Consumers and businesses alike must navigate these challenges carefully, staying informed and adapting to the evolving financial environment.
Darren Davidson, a Siemens Energy executive, recently told MPs that the UK must 'stick with the plan' regarding the transition to clean energy. His remarks, while focused on a different sector, echo the general sentiment that consistency and long-term planning are crucial for navigating economic uncertainties.
"We must stick with the plan." - Darren Davidson, Siemens Energy
The coming months will be critical in determining how the UK addresses these challenges and shapes its economic future.