‘Retail needs more than an interest rate cut’

The Bank of England’s interest rate cut from 1.5 per cent to a record low of 1 per cent yesterday has been met with scepticism of how effective it will be for UK businesses. 

The cut came as new figures revealed that corporate insolvencies are on the rise. The number of businesses becoming insolvent rose by 50 per cent in the last quarter of 2008 in a like-for-like comparison with 2007. 

British Retail Council business director Jane Milne said: “Interest rate cuts are not the only tool to fix the recession. The key issue now is not the cost of credit – but its availability. 

“The BRC’s Shop Price Index shows the weakening pound is feeding through to the cost of imports and some shop prices. The Bank of England faces a fine balancing act between further weakening sterling and attempting to revive the economy. What we need now is better access to credit and a boost to consumer confidence,” Milne added.