The Bank of England’s Monetary Policy Committee (MPC) has observed an “unusually sharp and synchronised downturn” in the world economy.
In its discussions before yesterday’s historic base rate cut, the MPC predicted world trade growth would be the weakest for some time.
Bankers and investors in offices in London are this morning coming to terms with the MPC’s decision to drop rates a further half point.
Banks are warning the reduction will make it difficult for them to maintain their own balances.
Mortgages director at Legal and General, Ben Thompson, has said without deposits the banks are in trouble.
“What lenders need more than ever are savers’ deposits – and they are not going to get them if they can offer only paltry rates of interest.”
The capital is home to the Bank of England, Lloyds TSB, HSBC and a number of other banking giants with offices in London.