Pressure on the Bank’s Monetary Policy Committee had been growing in the wake of plummeting consumer confidence, evidence of grim trading on the high street – with profit warnings coming in thick and fast, and falling property prices.
Reacting to today’s (Thursday) decision to cut interest rates the British Retail Consortium said this cut must be the first of a series if recession is to be avoided in 2008.
BRC director-general Kevin Hawkins said: “Customers and retailers will be relieved the Bank hasn’t delayed this overdue rate cut again. Putting it off would only have increased the chances of the economy’s downward momentum becoming stronger and that much harder to reverse.
“With customers under severe pressure it is only a first step to reviving consumer confidence and will make only a marginal difference to spending this side of Christmas. To soften the downturn that is clearly on the way for 2008 and avoid a full blown recession this must be the first of a series of cuts. The sooner the Bank delivers the next one the better.”
This week, fashion retailers Alexon and Moss Bros have both issued profit warnings as early Christmas trading disappointed.