Bank of England cuts base rate

Date: 5th December 2008

The Bank of England has cut its base lending rate by 100 basis points to two per cent, its lowest in more than 55 years.

Following last month's historic 1.5 per cent reduction, the Bank's monetary policy committee deemed it necessary to take further action to encourage the financial sector to begin lending again.

National chairman of the Federation of Small Businesses (FSB), John Wright, commented: "This historic rate cut sends out the right message to the banks to lend fairly to small businesses.

"This cut will provide a welcome piece of mistletoe to give a kiss of life to the economy when it needs it most."

Despite the warm reception, the FSB warned that the impetus was now with banks to resume lending to business start-ups, as it reported that one in three small firms was still struggling to access finance.

In other news, the British Retail Consortium recently expressed concern over the proposed Business Rate Supplementary bill, which could see small firms pay more in taxation.