Both the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB) are disappointed by the Monetary Policy Committee (MPC) decision not to reduce interest rates. The signs of recession are upon us and an early opportunity to nip it in the bud has been missed.
Commenting on the Bank of England’s interest rate decision, David Frost, director general of the British Chambers of Commerce said, "British business is disappointed by the MPC's decision to leave interest rates unchanged. We believe that the MPC has missed an opportunity to support economic activity, at a time when the evidence of slowdown in the pace of growth is becoming very pronounced. The economic circumstances clearly justify a cut in interest rates.
"Most recent economic figures point to a marked deceleration in activity, with domestic demand slowing sharply and confidence weakening. UK GDP growth figures for Q1 2005 have been revised down further and are below trend, only 0.4% on a quarterly and 2.1% on a year-on-year basis. Consumer spending growth has been a minimal 0.1% in Q1, while retail sales and the housing market remain both persistently weak. Investment is sluggish, while UK exports fell 0.9% in Q1 2005. It is particularly worrying that unemployment on the claimant count measure has risen in each of the last four months, by a cumulative total of more than 41.000.
"The UK economic climate is becoming increasingly difficult. Given the worsening underlying risks facing UK businesses, and manufacturing in particular, we strongly urge the MPC to take firm action aimed at supporting the economy. Early interest rate cuts should be urgently considered."
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