Following its cuts to interest rates recently, The Bank of England have again slashed interests rates to the lowest ever rate in the Bank’s 325-year history.
In an emergency move to support the UK economy, it is the second cut in interest rates in just over a week, bringing them down to 0.1% from 0.25%
The Bank said the measures taken last week were not going to be enough and believed a further package of measures was warranted: “The spread of Covid-19 and the measures being taken to contain the virus will result in an economic shock that could be sharp and large, but should be temporary.”
Jeremy Thomson-Cook, chief economist at Payment Company Equals Group, said: “ Lower rates and additional quantitative easing can keep markets satisfied and borrowing costs for both businesses and the government down but unless money is forced into the hands of small businesses soon, then it will be for nothing.”
To support the economy and health system the UK will require higher government borrowing, with the Bank of England’s measures, it is hoped that this will ensure the market can absorb this additional supply without undue stress.
Commenting on the decision by the Bank of England’s Monetary Policy Committee to cut interest rates to 0.1%, Suren Thiru, Head of Economics of the British Chambers of Commerce (BCC), said:
“The decision to cut interest rates to their lowest ever levels and restart quantitative easing reflects an increasingly dire near-term outlook for the UK economy.
“This may give a short-term boost to market confidence, but will have little long-term effect unless it translates to practical support for businesses. It is critical that the Bank of England works with financial institutions to ease cash flow challenges for firms on the ground in this increasingly turbulent period.”
The key Monetary Policy Committee will meet again next week to discuss further.
The Herefordshire & Worcestershire Chamber of Commerce would like to know what issues that your business is facing during these uncertain times, please do get in touch by calling 01905 673 600.