How the IMF’s latest outlook makes regular cash reviews more important
The IMF expects UK household inflation to average 3.3% in 2026 and 2.8% in 2027, with geopolitical pressure on energy prices a key driver. For anyone holding cash in an account earning less than inflation, the real value of that money can fall over time. In simple terms, the balance may stay the same, but its spending power is reduced.
Why this matters now
The IMF’s update contains some reassuring news. It has raised its 2026 UK growth projection, suggesting the economy has shown more resilience than expected despite geopolitical pressures and higher energy costs. But the Fund also warns that this will change next year, as high energy prices and elevated interest rates weigh on household spending and business investment.
For cash holders, the more important change is the 2027 inflation forecast. Raising it to 2.8% from 2.4% suggests this is not a short-lived spike. Households and businesses are likely to keep feeling the pinch of rising prices well into next year, which makes the cost of idle cash a longer-term problem.
The problem is not inflation alone. It’s the “set-and-forget” approach to cash. Many wealth managers’ clients, corporate treasurers and SME finance teams still hold large balances with one bank, often on a rate that was competitive once and has since slipped. If that rate sits below inflation, the balance is shrinking in real terms, even as the number on the statement stays the same. The result is a real-terms drag on cash and at 3.3% inflation, that can add up quickly.
As a simple example, a £500,000 balance earning 2% against 3.3% inflation loses roughly £6,500 of purchasing power in a year, before considering tax or other factors. Cash left on an unchanged low rate can lose value in real terms, even if the balance itself does not fall.
Cash as an active asset
The shift we encourage is to stop treating cash as an idle buffer and manage it like any other part of the balance sheet, with a clear purpose, a measurable return and regular review.
That means asking:
Why manual rate reviews are hard to keep up with
Most teams know they should shop around. In practice, comparing rates across banks means researching different providers, comparing products and completing a fresh round of onboarding and due diligence every time you open an account. By the time you’ve finished, the best rates may have moved and the effort rarely gets repeated.
Rates shift constantly, and inflation shocks tend to accelerate that. A process that takes weeks can struggle to keep pace with a market where products and rates change regularly. This is the case for a digital cash marketplace: one application, one dashboard, and access to savings products from a panel of 25 banks.
Diversification without the admin
Spreading finances across several banks can help reduce concentration risk. The Financial Services Compensation Scheme (FSCS) protects eligible deposits up to £120,000 per person, per authorised firm. For larger balances, it can be worth considering whether deposits are spread across banks with separate banking licences.
Traditionally, that meant opening, funding and monitoring multiple accounts, with separate applications, logins and statements for each. Akoni removes that friction. Register once, then place cash with multiple partner banks through a single hub account. Please note that some banks share a licence, so protection is assessed per banking group and not per brand. Check the Deposit Guarantee, Terms and Conditions and Key Facts for each product for specific FSCS information.
From idle balance to active asset
Inflation forecasts will change and so will interest rates. What remains constant is the need to review where cash is held and whether it is still working as intended. At 3.3% inflation, a single-bank balance on an unchanged low rate can lose value in real terms, even though the figure on the statement stays the same.
The organisations that protect their finances best are the ones that know where their money is, what it earns, how quickly they can access it and how exposed they are to any one bank. They review those points regularly, not once a year.
That is what active cash management means in practice: treating cash as an asset with a job to do, whatever the inflation headline says.
Source: https://www.imf.org/en/countries/gbr
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