Interest rates cut would counter threats to growth but MPC expected to wait

Commenting ahead of the MPC’s interest rate decision on Thursday, David Kern, Economic Adviser to the British Chambers of Commerce, said:

“Many analysts expect the MPC to keep interest rates on hold on Thursday at 5%. But waiting would be a mistake. The threats to growth have become more acute since the April MPC meeting with UK house prices recording their first annual decline in more than a decade and UK consumer confidence plunging to its lowest level since 1992. Major UK banks are also being forced to raise large amounts of new capital, whilst falls in commercial property prices could worsen the pressures facing banks.

“UK business has so far remained remarkably resilient in the face of worsening threats and if correct policies are adopted, recession can certainly be avoided. However, it would be complacent to disregard the dangers facing the economy. A small cut in interest rates on Thursday, to 4.75%, would alleviate stresses in vulnerable areas of the economy and strengthen business confidence without taking undue risks with inflation”

Ends

Media Contacts:

Nick Dines
Tel: 020 7654 5812
Email: n.dines@britishchambers.org.uk

OR

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to Editors:

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.