UK needs an interest rate cut

According to the British Chambers of Commerce (BCC), the Bank of England should cut the key interest rate by a half point to 4.5 percent this week as business confidence is currently at an all time low.

Based on a survey of almost 5,100 companies, business confidence has fell to the lowest since the data began in 1989, as both the service and manufacturing industries have all contracted at a faster pace than expected in the second quarter.

Both the BCC and the Confederation of British Industry, are now calling on the central bank to make the biggest cut in borrowing costs since 2001, as inflation is running at its highest rate for over 10 years, both institutions believe that drastic action is needed.

The BCC’s index for factory sales fell to -13 in the third quarter from -3 between June and August, and with added negativity from both business and consumer confidence it seems as though change is needed.

The bank will cut its benchmark rate by at least quarter point on October 9, according to 48 of 61 economists in a Bloomberg News survey, with others predicting a more optimistic 0.5 percent cut.

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