The Bank of England should cut interest rates this week to boost growth and shore up business confidence for the second half of the year, according to EEF the manufacturers organisation.
Previously, EEF had not called for a cut because it believed the decision remained finely balanced and any cut needed to be sustainable. EEF also continues to dispute the accuracy of official data on manufacturing output. Whilst conditions are difficult and margins remain tight, evidence taken from EEF regions across the UK in recent days suggests that volumes remain reasonable and conditions are flat at worst rather than recessionary.
However, in the light of weakening growth, the benign outlook for inflation, political and economic uncertainty and weakening business confidence, EEF believes the Bank can now safely make a cut in interest rates which will be sustainable.
EEF Director General, Martin Temple, said:
“The Bank has been right to ignore premature calls for a cut in rates which might not have been sustained. However, on balance we believe it should move now to shore up business and consumer confidence at a time of growing uncertainity.”