Small businesses demand 1% base rate cut

Date: 4th November 2008

Small businesses in the UK are demanding that the Bank of England cut its lending rate by a substantial amount.

A survey by the Federation of Small Businesses (FSB) found that three quarters of smaller firms backed the Bank to make a cut to its rate.

Statistics from the FSB show that as many as 1.5 million business start-ups risk insolvency due to the deteriorating economic climate.

Chairman of the FSB, John Wright, said: "The first step is for the Bank of England's monetary policy committee (MPC) to send out the right message this week by cutting interest rates by one per cent.

"This should hopefully encourage banks to lend and secure the future of millions of businesses."

He added that a situation such as that seen in the early 1990s - when 1,000 businesses a week were collapsing - could be prevented if banks released more money.

The MPC will begin its meeting tomorrow (November 5th). In the meantime, business start-ups should consider visiting their accountant to discuss their financial situation.