Business relief at cut in interest rates
8 October 2008 The Bank of England has cut the cost of borrowing by 0.5 per cent to 4.5 per cent. The move was shadowed by six other central banks. The cut was made as part of an effort to stabilise the international money markets and to breathe new life into the domestic economy. A number of UK business groups have been urgently pressing for a cut in rates as a way of stimulating activity. David Frost, the director general of the British Chambers of Commerce, said: "We are thrilled that the Bank of England has taken this bold and necessary step. "The economy has been facing an emergency, and the [Bank] could not afford to wait. This cut will, for now, steady the markets and inject much needed confidence. Alleviating the dangers of a major downturn must be the overriding priority for the [Bank] right now. Over the next four months, interest rates must be cut to four per cent as a minimum." John Cridland, the CBI's deputy director-general, agreed: "This was an essential and timely rate cut which the CBI had called for to help restore business and consumer confidence. "We have now seen major steps by both the Government and the Bank of England to support the economy and the financial system. These will be welcomed by business, and will help the economy at a critical time. "We also applaud the coordinated interest rate cuts by key central banks, which will benefit the global economy and stabilise financial markets." EEF chief economist, Steve Radley, commented: "Manufacturers will welcome this bold and decisive move to arrest the current crisis and collapse in confidence. Coupled with the plan to shore up the financial system today's co-ordinated moves should help arrest the potential slide into depression." John Wright, the national chairman of the Federation of Small Businesses, said that the decision should help small firms provided that the banks reduce the cost of their small business services. Mr Wright added: "We would urge the Government, now that it has a stake in the banks, to ensure all base rate cuts announced by the Bank of England are honoured by the clearers."
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