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01/08/2001
Pressure grows for cut in UK interest rates
Northern Ireland manufacturers will be hoping for a quarter point cut in UK interest rates to help boost the sector as pressure grows on the Bank of England to make a move.
The Bank’s Monetary Policy Committee (MPC), who are expected to announce their decision on Thursday 2 August, have not changed interest rates since May, but are coming under increasing pressure to announce a cut in the rate.
Although retail sales and house prices remain buoyant, debate centres on the relatively high UK interest rate and the strong pound, which is strangling exports and resulting in profit warnings from many companies.
The CBI has been vociferous in its campaign calling for a cut in the UK rate.
Evidence is coming to light that a “two-speed” economy may be developing in the UK, one where the manufacturing sector continues to suffer while the retail sector thrives and consumer spending grows.
The CBI’s latest survey on retail spending revealed that almost 60 per cent of retailers were reporting sales up on last year.
CBI Associate Director of Economic Analysis Sudhir Junankar said: "The survey is further evidence of the two-speed economy, with retail sales remaining strong while manufacturing output continues to decline.
“Although retailers enjoyed an unexpected pick-up in sales in July, they do expect sales growth to ease during August. Because of the impact the global slowdown is having on manufacturing and other exposed businesses, the CBI stands by its judgement that a quarter-point cut in interest rates would be a prudent move, without taking risks with inflation."
Footwear and leather shops, grocers and durable household goods' stores reported the largest growth in sales compared with a year earlier. Chemists, booksellers, stationers and DIY stores also experienced significant sales increases, while off-licences reported sales growth for the first time since November 2000.
(SP)
The Bank’s Monetary Policy Committee (MPC), who are expected to announce their decision on Thursday 2 August, have not changed interest rates since May, but are coming under increasing pressure to announce a cut in the rate.
Although retail sales and house prices remain buoyant, debate centres on the relatively high UK interest rate and the strong pound, which is strangling exports and resulting in profit warnings from many companies.
The CBI has been vociferous in its campaign calling for a cut in the UK rate.
Evidence is coming to light that a “two-speed” economy may be developing in the UK, one where the manufacturing sector continues to suffer while the retail sector thrives and consumer spending grows.
The CBI’s latest survey on retail spending revealed that almost 60 per cent of retailers were reporting sales up on last year.
CBI Associate Director of Economic Analysis Sudhir Junankar said: "The survey is further evidence of the two-speed economy, with retail sales remaining strong while manufacturing output continues to decline.
“Although retailers enjoyed an unexpected pick-up in sales in July, they do expect sales growth to ease during August. Because of the impact the global slowdown is having on manufacturing and other exposed businesses, the CBI stands by its judgement that a quarter-point cut in interest rates would be a prudent move, without taking risks with inflation."
Footwear and leather shops, grocers and durable household goods' stores reported the largest growth in sales compared with a year earlier. Chemists, booksellers, stationers and DIY stores also experienced significant sales increases, while off-licences reported sales growth for the first time since November 2000.
(SP)
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Northern Ireland WeatherToday:A chilly start with a widespread frost and some freezing fog, any freezing fog slow to clear. Otherwise bright with sunny spells and coastal showers. Light winds. Maximum temperature 6 °C.Tonight:Coastal showers dying out with a widespread frost developing along with freezing fog, which could become extensive. Winds remaining light. Minimum temperature -3 °C.
