Interest rate cut will bring 'little relief' to city
THE Plymouth branch chairman of the Federation of Small Businesses has said today that the Bank of England’s historic move to slash interest rates to just 1.5 per cent will bring ‘little relief’ in the recession.
Richard Thomas told The Herald that the BoE move to cut interest rates from two per cent to 1.5 per cent – the lowest since the Bank was founded in 1694 – is 'good' but he wondered if it would make any difference to the consumer.
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Richard-Thomas
The cuts were announced at lunchtime. Richard Thomas said: “From a small business perspective, it is always good to see interest rates falling – but the reality in January 2009 is that business levels now depend on consumers having the drive to go out and spend money.
“While consumers are taking a defensive stance – saving for a rainy day and keeping hold of their money – that is no relief for businesses, small or large.
“In my opinion, then, the interest rate cut is neutral news because the future of the economy is about consumer sentiment. Hearts and minds are now the issue. Is a 0.5 per cent cut going to give more confidence to consumers?”
Some business leaders will be disappointed as they were looking for an even bigger move to combat a worsening recession.
For a full report on how the latest interest rate cut will effect the city's economy see Friday's edition of The Herald.
8 Comments
by nigel, plymouth
Friday, January 09 2009, 7:42PM
“Can somebody please explain to me what this 1.5% interest rate means to us all? I don't understand how it helps the man in the street. I hear people with money in the bank wont be getting so much interest on their money. Why can't we borrow money from the banks at 1.5% interest .Sorry for being thick here but im sure there are others on here that need the interest rate thing explained to them .”
by grumpy, plymouth
Friday, January 09 2009, 9:40AM
“Why would the Government worry about interest rates for savers. They are getting 12% on the money they lent the banks and are asking them to lend it at 1.5%.
Career politicials without an Economics GCSE between them! In it for number one, still drawing their expenses and drinking in their subsidised Westminster bar and complaining that some of us can still buy a pint for 99p. Bless them all.”
by Ben, plymouth
Friday, January 09 2009, 1:00AM
“The recession's the best thing thats ever happened, it's like a dream come true, thank you!”
by Alex, callington
Thursday, January 08 2009, 5:01PM
“This interest rate cut is a disaster. Being below the Eurozone has made the pound fall and imports from China, India and Europe will be more expensive, thus negating by far the reduction in VAT.
Pensioners who rely on savings will be much more careful with their spending, whereas in the cheaper economy now they would be using their interest and some capital to spend. They have more disposable income as no children etc.
We will see more teenage pregnancies as Gordon has improved child benefit and thus it becomes a 'career' option.
If you are on the dole stay there as the state will protect you.
If you are in a job, have savings over £6k then keep it as you wont get Jobseekers Allowance.
PCC will waste more money on pointless projects (Life Centre) and council tax will go up.
Here endeth the first lesson - mind you the agnostic bus will be passing soon.”
by Alex, Callington
Thursday, January 08 2009, 5:00PM
“This interest rate cut is a disaster. Being below the Eurozone has made the pound fall and imports from China, India and Europe will be more expensive, thus negating by far the reduction in VAT.
Pensioners who rely on savings will be much more careful with their spending, whereas in the cheaper economy now they would be using their interest and some capital to spend. They have more disposable income as no children etc.
We will see more teenage pregnancies as Gordon has improved child benefit and thus it becomes a 'career' option.
If you are on the dole stay there as the state will protect you.
If you are in a job, have savings over £6k then keep it as you wont get Jobseekers Allowance.
PCC will waste more money on pointless projects (Life Centre) and council tax will go up.
Here endeth the first lesson - mind you the agnostic bus will be passing soon.”
by Keith, Eggbuckland
Thursday, January 08 2009, 4:38PM
“Is this the guy off the Brylcreem adverts?”
by Keith, Eggbuckland
Thursday, January 08 2009, 4:31PM
“For many, many months publicly the Government was stating that the banks should be lending money, however behind the scenes they were is discussions hammering out the details, hence the perceived banking delays.
As for some business leaders being unhappy with these cuts, if that is the case in all honesty you will not be in business for much longer.”
by Steve, Plymouth
Thursday, January 08 2009, 1:23PM
“About time the banks were either forced to start lending "our own money" or be nationalised. I'm not one for nationalising any company but when our money is being "given" to banks to prop up their own bottom lines then I'm all for it.”