FSB welcomes huge rate cut

Date: 6th November 2008

The Bank of England's 1.5 per cent base rate reduction has been welcomed by the Federation of Small Businesses (FSB).

Officials at the Bank's monetary policy committee made the announcement earlier this afternoon, which leaves the base rate at a record low of three per cent.

It is hoped that the cut will spur further lending, but it is now up to the UK's lending institutions to pass on the favour to the small business sector.

John Wright, national chairman for the FSB, said: "We called for a bold one per cent cut and this unexpectedly large rate cut will make an enormous difference to small firms and will put money in people's pockets before Christmas.

"The cut amounts to a generous saving for small firms of £750 million on loans and overdrafts."

The move will no doubt come as a relief for business start-ups, which have had a tough year to contend with, including taxation rises and changes to the self-assessment tax return system.

During a parliamentary session yesterday, prime minister Gordon Brown urged the UK's banks to pass on any rate cut to mortgage holders and business start-ups.