FSB warns that a further interest rate cut will not work

The Federation of Small Businesses (FSB) is calling for the Bank of England (BoE) to hold fire on any further interest rate cuts ahead of the Monetary Policy Committee’s decision on Thursday 5 February 2009.

Figures from a survey of over 4,000 small businesses show that the recent rate cuts have not provided the boost to the economy that many hoped for.

According to the poll more than two thirds (63 per cent) want the BoE to keep rates at their current level of 1.5 per cent. Only a quarter (24 per cent) said they would like a rate decrease – down from 58 per cent who called for a rate cut in a similar survey conducted in December 2008.

This indicates small businesses are not feeling the impact of the interest rate cuts and that access to finance, rather than the cost, remains a key problem.

John Wright, FSB National Chairman, said:

“These figures suggest that the recent interest rate cuts are not having the desired effect and other means of economic stimulus are required.

“Small businesses are clearly worried that this monetary policy has been used extensively over the last few months yet they are still struggling to access cheaper finance.

“The concern now is that if rates are cut any further there may not be too much more room for manoeuvre in the economy. The onus is really on the banks to start promoting these lower rates to fire up the economy.”

ENDS

Notes to Editors

1. The FSB is Britain’s leading business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at http://www.fsb.org.uk.

2. Over 4,000 small businesses were surveyed between Friday 30 January and Monday 2 February 2009 on the effect of the economic climate.

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128 / 07917 628 998
Prue Watson: 020 7592 8121 / 07825 125695
Marc Shoffman: 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions