7th January 2008
Businesses urge Bank to cut interest rates again
UK Businesses have called on the Bank of England to cut interest rates again when it meets this week, amid gloomy predictions for 2008.
The British Chambers of Commerce (BCC), which was quick to welcome December's 0.25-percentage point interest rate cut, urged the Bank to reduce the rate to 5.25%.
The call follows last week's Business Outlook poll for the BCC, which revealed a decline in businesses' confidence in the government's ability to manage the economy.
The most recent Business Trends Index, published today by BDO Stoy Hayward, also reveals declining optimism among firms, with the index falling for the fourth month in a row. It does, however, note that manufacturers have reacted positively to December's interest rate cut.
BCC economic adviser David Kern said: "The unusual pessimism that has greeted the start of 2008 exacerbates the risks that consumer and business confidence will decline, and strengthens the case for a modest cut in UK interest rates."
"A decision to wait would not be surprising, but would be wrong in our view," he added. "A small cut in UK interest rates on Thursday would reduce the risk that dangerous emergency measures would be needed later in the year."
The British Chambers of Commerce (BCC), which was quick to welcome December's 0.25-percentage point interest rate cut, urged the Bank to reduce the rate to 5.25%.
The call follows last week's Business Outlook poll for the BCC, which revealed a decline in businesses' confidence in the government's ability to manage the economy.
The most recent Business Trends Index, published today by BDO Stoy Hayward, also reveals declining optimism among firms, with the index falling for the fourth month in a row. It does, however, note that manufacturers have reacted positively to December's interest rate cut.
BCC economic adviser David Kern said: "The unusual pessimism that has greeted the start of 2008 exacerbates the risks that consumer and business confidence will decline, and strengthens the case for a modest cut in UK interest rates."
"A decision to wait would not be surprising, but would be wrong in our view," he added. "A small cut in UK interest rates on Thursday would reduce the risk that dangerous emergency measures would be needed later in the year."
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