Rate cut needs to be passed on, says business leader

Date: 9th October 2008

It is essential that the Bank of England's rate cut is passed on by other lenders, a business leader has argued.

In a co-ordinated move, six central banks yesterday (October 8th) cut their base rates by 0.5 per cent.

While the decision is invariably seen as good news by small firms, it will only benefit the sector if other lenders opt to follow suit.

Frank McKenna, chairman of the business lobby group, Downtown Liverpool in Business, told LDP Business: "The interest rate cut is good news but only if the banks are prepared to pass it on.

"It was the action of the banks that got us into this mess in the first place and now it is their actions again which is making it worse."

He added that British lenders needed to be more "entrepreneurial" than they have been in the past few months if they were to breathe life into the small business sector.

Several banks, including Lloyds TSB and Woolwich quickly announced their decisions to shadow the monetary policy committee's interest rate reduction yesterday.