Banks urged to follow rate cut
PRESSURE was mounting today on banks to pass on the full benefits of the interest rate cut to struggling homeowners and businesses.
The Government is urging all banks and building societies to help their customers after only a handful of lenders said they would pass on yesterday’s 1% reduction in full.
HSBC, Lloyds TSB, Barclays’ lending arm the Woolwich and Bristol & West all said they would be reducing their standard variable rate by at least the full 1%, while other lenders continued to keep their rates under review.
The Bank of England’s Monetary Policy Committee yesterday cut the cost of borrowing to 2% - its lowest level since 1951.
North-east business leaders have welcomed the third successive monthly cut.
Richard Bottomley, president of the North East Chamber of Commerce, said the cut, along with the fiscal stimulus package in the pre-Budget report, will be a “welcome boost” to the economy.
And Liz Mayes, Confederation of British Industry assistant regional director, added: “The economy needs a significant monetary stimulus and the bank has clearly decided this will be best achieved by another big cut in interest rates. What is critical for business and consumers alike is that this reduction is passed on.”
Richard Elphick, chairman of the Institute of Directors North-east branch, said the cut was a bold but necessary move. “The MPC is clearly taking the view that the longer deep interest rate cuts are delayed the worse the recession is likely to become.”
Manufacturers’ organisation EEF said pressure must be brought on the high street banks to pass on the cuts.
EEF regional manager, Tony Sarginson, said: “The bank is pulling out all the stops to prevent the recession from deepening. It is now essential that government also steps up to the plate with targeted measures to support business and brings pressure to get high street banks to start lending again.”
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