News Article - 03 October 2008
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There is a "very real probability" that business growth could be stunted by a "fairly long, serious and painful recession", according to the Centre for Economics and Business Research (CEBR).

Ben Read, senior economist at the centre, believes that the Bank of England should begin dealing with the possibility by cutting interest rates by 50 basis points during the next cut on October 9th.

He also predicts that there will be three cuts in the spring and by the end of 2009 rates will be between three and 3.5 per cent.

However, even cutting the rates could have little effect "because Libor is so high, the inter-bank rates are so high and the real interest rate that people are experiencing is actually a lot higher than the Bank of England's rate anyway".

Mr Read did concede that a cut in October would show that the bank "is starting to get its act together", even if improvements would not be felt for months.

He concluded: "Action is needed now and they should be looking at fairly rapid cuts in the near future."

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