Interest rates cut to 1.5 per cent

Ian McCafferty, CBI chief economic adviser, says: “Today’s more modest interest rate cut reflects the bank’s recognition that interest rate reductions on their own cannot restore credit flows, the most important factor determining the prospects for the economy. "However, this move to support business and consumer confidence will be welcomed. “If credit flows can be restarted, the monetary stimulus now in the pipeline is significant, especially when the fall in the pound is taken into consideration. A more gradualist approach to rate setting is likely in the coming months.”

The Federation of Small Businesses has welcomed the decision but wanrs that access to finance remains a real worry.

FSB national chairman John Wright says: “Around a third of our members are still complaining about poor access to affordable finance.

“The FSB would like a cast-iron guarantee that the banks will not only pass on the interest rate cuts, but pass on the money to the small businesses that need it. The small business sector is the sector to see the UK out of recession in 2009 and into economic recovery, but this can only work if credit lines start flowing to viable businesses again.”

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