Households across Scotland face renewed pressure on their finances after the Bank of England increased interest rates to 4%, prompting fresh criticism of the UK Labour Government over the cost of living.

The Bank’s Monetary Policy Committee raised the base rate from 3.75% to 4% on Thursday 5 November 2026, marking the first increase in more than three years.

The decision comes amid stubborn inflation and rising energy costs, with the Bank seeking to prevent further increases in prices from becoming embedded across the wider economy.

For homeowners with mortgages linked to the base rate, the increase could mean higher monthly repayments, while other borrowers may also face additional costs.

The SNP has criticised the decision’s impact on families already struggling with household bills, accusing Prime Minister Andy Burnham’s Government of failing to deliver promised improvements in living standards.

SNP Economy spokesperson Kirsty Blackman MP said:

“This is another hammer blow to hard-pressed households who are facing yet another year of soaring bills under the Labour government.

“Andy Burnham promised he would cut the cost of living but every major household bill has risen on his watch.

“Energy bills will soon be more than £1000 higher than the Labour Party promised, the cost of food and fuel is sky-high, and mortgage rates are already at 6% adding an extra £5000 a year to average mortgage interest payments compared to 2021.

“Families need real help but the Labour government is failing to meet the moment.

“Scotland is an energy-rich country with huge wealth and resources but under Westminster control we are paying some of the highest bills in Europe and have suffered two decades of declining living standards.

“It shows why Scotland needs a fresh start with independence so we can use our huge energy wealth to lower bills and build a better future.”

The increase follows renewed concerns about inflation, which reached 3.5% in September, remaining above the Bank of England’s 2% target.

Higher interest rates are intended to reduce inflation by making borrowing more expensive and encouraging saving, although that approach can also place additional pressure on household budgets and businesses.

The Bank of England makes interest rate decisions independently of the UK Government, with its responsibility focused on maintaining price stability.

The immediate effect on individual households will depend on their borrowing arrangements, with those on tracker or variable rate mortgages generally more exposed than borrowers protected by existing fixed rate agreements.

For businesses, particularly smaller firms reliant on borrowing, the increase could also make investment and expansion more expensive.

The latest decision adds another complication for a government seeking to improve household finances while managing continuing pressures from energy prices and inflation.

For families already balancing mortgages, food bills, transport and heating costs, the prospect of more expensive borrowing brings another unwelcome challenge as winter approaches.