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Banks urged to pass on interest rate cut to small businesses
Archived article dated Thursday December 4th 2008
The Forum of Private Business (FPB) is welcoming the Bank of England's decision to slash interest rates to 2% - the lowest level since 1951 - but warning that struggling small businesses will only benefit if the banks follow suit.
The Bank's Monetary Policy Committee's 1% reduction in the base rate follows its 1.5% cut in November 2008. However, although it is gradually coming down, the interbank lending rate (LIBOR) remains just under 1% above the base rate. 'Real' interest rates, those being offered by banks to their customers, are often significantly higher. The FPB is urging the UK's major lenders to heed the Bank of England and pass on the cut.
"This further cut in the rate of interest is pleasing. I certainly hope that it will be very quickly reflected in both market rates and in the cost of borrowing being offered by banks to small businesses," said the FPB's banking adviser, David Cavell.
Although all of the banks benefitting from the Government's £37 billion bail-out scheme have now pledged to maintain the availability of loans and overdrafts for small firms, there is still evidence that credit restrictions are being imposed by lenders, including those set to receive funds from the European Investment Bank (EIB).
Tagged as: fpb | small businesses | convenience | retail | convenience retail show
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