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04 August 2016

Bank of England takes decisive action on interest rates

Commenting on the Bank of England’s decision to cut interest rates by a quarter percentage point to 0.25%, Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said:

“Small businesses are operating during a period of significant political and economic uncertainty. FSB research carried out before the EU referendum showed small business confidence had fallen to a four-year low [1]. In this challenging environment, it is encouraging to see the Bank of England taking decisive action to boost the economy.

“This is the first time interest rates have been cut for seven years and brings rates to a new historic low. Lower rates should lead to cheaper borrowing costs, making finance more affordable and helping to support business investment. Small firms will also welcome the boost to household spending power and consumer demand.

“However, FSB members do have concerns about the longer term economic outlook. There is a real risk that sterling will depreciate even further, which could benefit the UK’s visitor economy and small exporters, but could also affect prices, inflation and investment. Medium-term forecasts indicate a slowing of the economy. We urge the Bank of England and the new Prime Minister to carefully assess the effects of today’s cut and do all in their power to boost economic confidence and growth.”