TIMESONLINE: Cost of borrowing lowest in more than 50 years
The economy is plunging deeper into recession despite emergency tax cuts and the multibillion-pound bank bailout, the Bank of England said yesterday.
Cutting the base rate to its lowest level in more than 50 years, the Bank said the outlook now was worse than a month ago, with manufacturing and consumer spending in sharp decline.
The one-point cut left the base rate at 2 per cent, its lowest since 1951, but economists are forecasting already that the cost of borrowing could fall further, with a base rate of zero per cent no longer out of the question. The Bank’s dramatic move followed a relentless stream of dire economic news over the past four weeks that has fuelled fears that Britain’s plight will be worse than the recession of the early 1990s.
The Bank, which cut rates by 1.5 percentage points in November, acknowledged the risk of a deep, prolonged recession yesterday. It conceded that more will need to be done to jump-start stalled growth, and paved the way for further rate cuts. In a bleak assessment, it said: “Business surveys have weakened further and suggest that the downturn has gathered pace. Consumer spending and business investment have stalled.” >>> Gary Duncan, Philip Webster, Gráinne Gilmore | December 5, 2008
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