One of the UK’s foremost retail bodies has criticised yesterday’s interest rate cut, saying that cutting the cost of credit is not as important as making it more available to retailers.
The British Retail Consortium said that the cut, which saw interest rates reduce from 1 per cent to 0.5 per cent, won’t significantly improve UK’s retail sector.
"The key issue is not the cost of credit but its availability,” said BRC director general Stephen Robertson. “With the Bank getting close to running out of road, it’s hard to see what another rate cut now can achieve other than further undermining exchange rates and savers’ incomes.
"The BRC’s Shop Price Index shows shop inflation rising as the cost of importing goes up and UK produce becomes more attractive for overseas buyers, restricting supplies at home.
"Making more money available in the UK economy is the right objective. Businesses and customers need better access to affordable credit."
Robertson also warned about the Bank’s move to put £75 billion into the economy, also announced yesterday: "Caution must be exercised. Mishandled, ‘quantitative easing’ could add to inflationary pressure which we’re already seeing from the weak pound."