Business welcomes rate cut
The decision by the Bank of England to cut interest rates by 0.25 per cent to 5.5 per cent has been welcomed by the business community.
It was the first reduction in the cost of borrowing in over two years.
Business groups had been urging a cut, with signs accumulating that the economy is slowing down.
Matt Hardman, campaigns manager at the Forum of Private Business, said: “It will have been a difficult decision to make, but ultimately the FPB believes it is the correct one. Many analysts are predicting that, in 2008, the UK’s economy will face its slowest year of growth in a decade, so cutting interest rates, particularly at this important time of year, should go some way to reassuring our members.”
Kevin Hawkins, director general of the British Retail Consortium, commented: “Customers and retailers will be relieved the Bank hasn’t delayed this overdue rate cut again. Putting it off would only have increased the chances of the economy’s downward momentum becoming stronger and that much harder to reverse.
“With customers under severe pressure it is only a first step to reviving consumer confidence and will make only a marginal difference to spending this side of Christmas. To soften the downturn that is clearly on the way for 2008 and avoid a full blown recession this must be the first of a series of cuts. The sooner the Bank delivers the next one the better.”
David Kern, economic adviser to the British Chambers of Commerce, agreed: “British business welcomes the MPC’s decision to cut Bank Rate to 5.5 per cent. Many authoritative analysts have advocated a cut in rates. The MPC has shown commendable flexibility and has made the correct decision. The cut in rates has helped to alleviate potential dangers facing the economy.”
Ian McCafferty, chief economic adviser to the CBI, added: “While there are as yet few signs that tighter credit conditions are heavily affecting the wider economy, the Bank is clearly concerned about continuing fragility in the financial markets and the effects on confidence more widely.
“It was a close call, with the Bank having to worry about inflationary pressures into 2008, whilst needing to ensure orderly credit markets and support business and consumer sentiment. Hopefully the decision will help stabilise the money markets and minimise any future impact on other sectors.”
Date:7 December 2007
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