Articles > BCC Calls for Rate Cut

The British Chambers of Commerce have made open calls to the Bank of England to reduce interest rates in the near term following third-quarter results from the manufacturing sector that make for grim reading. The recession in this sector is deepening, and there are fears that the struggle to survive will be one that a number of smaller businesses will not prevail in.

In describing the manufacturing sector, the BCC used the word ‘alarming’ – obviously it is deeply concerned with the state of things at the moment, and it is not just the manufacturing sector that is suffering. According to the Q3 report, both domestic and export sales have fallen, along with cashflow and employment.

As a result of the figures of the report, and the downturn seen in domestic sales across the board, the BCC has said that it is giving serious consideration to cutting its gross domestic product (GDP) forecast again to just 1.7 percent.

All of this has led to the BCC to call for the monetary policy committee to cut the base rate of interest, something that it feels is necessary to stimulate growth in the struggling business sector. It believes that in the slowing economy that the MPC should keep interest rates as low as possible whilst keeping inflation in check in the medium term.

The business sector has been applying pressure to the MPC for a number of months now, asking for a cut to be made – something which did happen in August, however the MPC remains clear that it is setting the borrowing rates in order to keep inflation in line with the two-percent target figure.