• The Bank of England’s decision to significantly raise interest rates had an immediate impact on borrowers and savers and presented new communication challenges to UK banks.
  • Our media analysis found that the interest rates’ impact on inflation became the main point of contention, while banks used the opportunity to showcase their competitive offerings and promote themselves.
  • We also found that the trending “what does it mean for you” coverage opened room for thought leadership, while the media amplified mortgage meltdown fears.

View a one-page infographic summary of the analysis

The UK media is closely following the Bank of England’s decision to raise interest rates for the 11th consecutive time, prompted by an unexpected surge in inflation. This development had an immediate impact on both borrowers and savers, making it a significant topic in the national discourse.

Against this backdrop, banks operating in the UK face communication challenges as they navigate the implications of these interest rate changes for their customers and attempt to maintain public trust.

To see how UK interest rates are being discussed in the media, we analysed 1,166 English-language articles published since October 2022. Here are our main findings:

1. Inflation became a point of contention

The connection between interest rates and inflation has become a central theme in the media debate around rising interest rates in the UK. As the Bank of England adjusted its monetary policy, the potential implications of this move on inflation and economic growth were being closely scrutinised by the public, policymakers, and experts alike, making Inflation the largest topic in the discussion:

However, the impact on inflation gave rise to many heated debates. Proponents of raising interest rates argued that doing so can help maintain price stability by curbing excessive borrowing, spending, and investment.

Furthermore, maintaining credibility in their commitment to controlling inflation was presented as essential for central banks, as it prevents unanchored inflation expectations that could lead to higher long-term interest rates and reduced investment.

On the other hand, opponents of raising interest rates asserted that such a move can have adverse effects on the economy. Higher interest rates may lead to reduced borrowing, spending, and investment, which in turn can slow down economic growth.

2. Banks leveraged savings rates as a PR strategy…

The media debate around rising interest rates in the UK has also been focusing on how banks are using this opportunity to showcase their competitive offerings and promote themselves. With individual banks and building societies typically passing on interest rate increases to customers, analysts are encouraging people to shop around for better savings rates. This has prompted major banks to act, with many improving their deals to levels unseen in years.

In the current climate of rising interest rates, banks are leveraging this opportunity as a PR strategy, promoting their new and improved savings offerings to attract customers and garner positive media attention.

We found that HSBC became the most influential organisation in terms of media impact (after the Bank of England, of course) with its significant rate increase on its fixed-rate account.

We determine an organisation’s media impact in the context of a topic by looking at its media influence score calculated in terms of coverage by high-profile media outlets, topic relevancy score measuring its contextual relevance, and media visibility as measured by the number of mentions.

HSBC announced a rate increase on its fixed-rate account from 1% to 5% from December, applying the change automatically to existing accounts. This move was positioned as a response to the increased cost of living and a way to support existing customers.

Similarly, Santander raised interest rates on both its base rate-linked and non-linked savings accounts, aiming to help its customers combat inflation and the rising cost of living.

Barclays, in an effort to promote healthy savings habits, offered what some media outlets called “one of the best interest rates on the market” with their Rainy Day Saver account, paying 5.12% Annual Equivalent Rate interest on savings up to £5,000.

3. …but banks had to defend their decisions

The generosity of banks’ savings rates was taken with a pinch of salt. Recently, the chief executives of Lloyds, NatWest, HSBC, and Barclays were called before MPs on the Treasury Committee to defend their institutions’ savings rates in light of constituent complaints that mortgage rates rose more quickly than returns offered to savers when the base rate increased.

The bank executives argued that the debate was incorrectly focused on the interest rates offered on easy-access savings accounts, which typically yield less than 1% return. Instead, they emphasised that regular saver deals provided market-leading interest rates, and instant-access products often served as a “gateway” to higher interest deals.

Bank bosses acknowledged that many people were actively searching for better deals as interest rates rose, and price comparison websites had become highly developed in this area. However, they also recognised that millions still lacked confidence in making good financial decisions and needed proper guidance.

By addressing these concerns, the banks aimed to defend their savings rates against criticisms, positioning their institutions as responsive to customers’ needs in the current economic climate.

4. The “what does it mean for you” coverage opened room for thought leadership

When mass media outlets covered rising interest rates, many of them focused on the “what does it mean for you” aspect, creating opportunities for economic experts to step in and provide thought leadership.

This type of coverage emphasised the personal and practical implications of economic changes, making the subject more relatable and engaging for readers.

Furthermore, this type of media coverage allowed economic experts to showcase their communication skills, making their expertise more accessible and engaging to a wider audience. By effectively translating complex economic theories and analysis into easily digestible and relatable content, these experts not only educated the public but also enhanced their reputation and credibility.

Economic experts who used this increased interest to their advantage by sharing their insights and knowledge became some of the most influential spokespeople in the debate, following public officials:

For example, William Marsters, senior UK sales trader at investment platform Saxo, was quoted as saying borrowers will be significantly affected by the decision to raise interest rates, as those with large mortgages or credit card loans in particular will continue to feel the squeeze with the cost of living already tightening any kind of consumer purchasing power.

Similarly, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, was cited as saying that the rising interest rates would add £77 a month to a typical standard variable rate mortgage repayment. In the meantime, leading City forecaster Samuel Tombs, chief UK economist at research firm Pantheon, said the capital is particularly vulnerable to a slump because London buyers have to take on such large loans to scramble on the property ladder.

5. Media amplified mortgage meltdown fears

The potential impact of rising interest rates on UK homeowners has become another focal point in the media debate surrounding the Bank of England’s monetary policy. With the era of ultra-low rates coming to an end, many households are now bracing themselves for more expensive monthly repayments.

Media outlets have been amplifying these fears by focusing on worst-case scenarios and highlighting alarming statistics, which can generate a sense of urgency and anxiety among the public.

Additionally, by giving prominence to the warnings from major mortgage lenders, the media reinforced the notion of a looming “mortgage shock” and the potential financial distress it may cause.

The growing concerns have been further fueled by warnings from major mortgage lenders, such as Lloyds Banking Group, whose CEO, Charlie Nunn, highlighted the possibility of a “mortgage shock” for 200,000 homeowners later this year. During an interview on Sky News’ Ian King Live, Nunn revealed that 10% of the bank’s mortgage customers are expected to exit fixed-rate deals in 2023. As one of the UK’s largest banking groups, encompassing Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows, this warning carried significant weight.

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