Business leaders call for interest rates cut

Business leaders are calling for a cut in interest rates to provide some relief in the economic downturn.

Greater Manchester Chamber has joined EEF in calling for a cut ahead of next week’s meeting of the Monetary Policy Committee.

Andrew Semple, spokesman for EEF, the manufacturers' organisation in the region, said: “EEF members across Manchester are growing increasingly concerned at the scale of the down turn we are now seeing in the UK economy as well as prospects in other key markets.

“Manufacturers are continuing to invest, but volumes are undoubtedly down as confidence takes a big knock. It seems that inflation is now approaching or indeed at a peak and we will see steep falls in the coming months.

“With that scenario apparent and with the bigger economic picture looking so bleak I know our members will be looking to the Bank of England to cut interest rates when they meet on Thursday; to do so immediately by a quarter percent and that this cut will be the start of a measured trend to continue to reduce rates into 2009.

“A failure to act at this stage will be greeted very badly as a signal that the Bank is not prepared to respond decisively to what we see as uncharted economic waters."

Chris Fletcher, Deputy Chief Executive of Greater Manchester Chamber, said: “The real effects of the economic situation are now becoming evident and whilst news on the stock markets has dominated, our members are beginning to report some significant impacts.

“Our members in the service sector are reporting some really difficult conditions and the position for exports has worsened considerably.

“The one bright spot is that in service and manufacturing there is an expectation that staff numbers will increase. Construction though is looking at increasing redundancies as they continue to bear the brunt of the downturn.

“Whilst there is a huge amount of turmoil at present, indeed I don’t think we have lived through such uncertainty before, there are increasing calls for a cut in interest rates to help keep the economy at least ticking over. The real concern is that consumer spending stalls completely and the knock-on effect from this could be very worrying indeed.”