Industry leaders in their offices in London have welcomed the Bank of England’s one per cent base rate cut.
By dropping the rate the Bank’s Monetary Policy Committee hopes to stimulate lending and promote business development stifled by a lack of credit.
Although Stephen Gifford, chief economist at Grant Thorton, noted the cut only came after “intense pressure from all angles including the manufacturing industry, financial services sector, retailers and banks”.
He also urged caution as any effect of the rate cut “will take many months”, he said.
General Secretary of the TUC , Brendan Barber described the reduction as “spot on” while Michael Coogan, director general of the Council of Mortgage Lenders said it would help to support the wider economy and “ultimately strengthen their businesses too”.
A lack of credit has made investment in commercial property more difficult and left several projects either unfinished, or mothballed.
The Bank itself acknowledged the recent economic period had been a testing one.
“In the United Kingdom, business surveys have weakened further and suggest that the downturn has gathered pace.” it commented.