Lancashire business leaders have issued a cry to the Bank of England to cut interest rates this week ahead of the bank's meeting on Wednesday.
Across the North West, business heads have been hoping for a cut, due to be announced on Thursday, to boost investors confidence and attempt to steer Britain clear of a possible recession.
The urge to cut interest rates has been further increased today with the FTSE 100 recording its biggest ever points loss since it was launched in 1984, dropping 391.1 points, resulting in £93.4 billion of shares wiped off the index.
Britain was not alone however, markets across the world were down. The Dow Jones fell below the 10,000 point mark for the first time in four years, while in Europe the Dax and the Cac 40 recorded heavy losses too.
Across the Atlantic, the $700 billion bailout package seems to have had a limited impact so far, with investors clearly keen to keep their hands in their pockets.
In Europe, it appears to be every man for themselves with the Republic of Ireland, Germany and Iceland first, followed by Denmark, Sweden and Spain all willing to put their own deposits before Europe's, scuppering President Sarkozy's proposal of a pan-European solution to the problem.
Chancellor Alistair Darling has moved to ease some worries about savings in Britain by raising the amount of guaranteed bank deposits from £35,000 to £50,000 and announced the Bank of England is to pump another £40 billion into the British banking system.
There's a fine line with cutting interest rates at such a crucial time. Do you cut rates to ease the shackles on the public to encourage spending and squeeze the banks funding further? Or do you keep the banks rate of funding the same in the hope that consumer spending will pick up on the back measures taken in Europe and the US?
There's no doubt on Wednesday Mervyn King and his men have a huge decision to deliver. Get it wrong and make no mistake, recession in Britain will probably be just around the corner.
Sources:
http://news.bbc.co.uk/1/hi/business/7655288.stm
http://www.lep.co.uk/businessnews/Slash-rates-now-plead-bosses.4557961.jp
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If we want the global economy to turn itself around, cutting interest rates is absolutely crucial.
Simple monetary policy demonstrates that the cutting of interest rates would lead to a greater ease of borrowing, greater consumer spending, greater aggregate demand within the macro-economy and a financial turnaround.
The severity of this economic plight may lead to this taking some time, but expansive monetary policy may prove to be an invaluable decision.
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