Capital's Struggling Firms Call for Rate Cut ; ECONOMICS
Duncan, Hugo, The Evening Standard (London, England)
CALLS for a cut in interest rates intensified today as businesses in London struggling with the credit crunch predicted a gloomy year.
The London Chamber of Commerce (LCC) found 58% of firms expect trade to slow this year, up from 9% 12 months ago and 25% on New Year's Eve.
Business leaders in the capital urged the Bank of England, led by Mervyn King, to cut rates from 5.25% to 5% on Thursday to make borrowing cheaper and boost economic growth.
London, particularly the City, is the engine room of the British economy but is facing a sharp slowdown as a result of the credit crunch.
The Bank's monetary policy committee (MPC) has cut rates from 5.75% since December but is reluctant to move as far as many would like because of concerns over rising inflation.
Dr Helen Hill of the LCC said: "The credit squeeze is genuinely worrying for businesses at the current time.
"Reduction in availability of corporate credit will have serious implications, particularly for many of the capital's smaller businesses whose confidence in their own immediate prospects has already been dented.
"The MPC must react positively to these concerns with a reduction in interest rates this week." The comments came as the Labourdominated Treasury Select Committee of MPs accused Chancellor Alistair
Darling of being too optimistic about the state of the economy.
In his first Budget last month, Darling estimated that the economy will expand by between 1.75% and 2.25% this year well above the …
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Publication information: Article title: Capital's Struggling Firms Call for Rate Cut ; ECONOMICS. Contributors: Duncan, Hugo - Author. Newspaper title: The Evening Standard (London, England). Publication date: April 7, 2008. Page number: 28. © Not available. Provided by ProQuest LLC. All Rights Reserved.
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