bart Posted April 10, 2008 Share Posted April 10, 2008 UK interest rates have been cut to 5% from 5.25% by the Bank of England in an attempt to spur the economy in the face of the global credit crunch. It is the central bank's third cut in interest rates since early December. The Bank said that disruption in financial markets and tighter credit conditions could lead to a slowdown in the wider economy. The largest mortgage lenders say they will pass on the cut to their mortgage customers who pay variable rates. Decision welcomed Business groups welcomed the decision and called for further cuts to shore up growth. "It is vitally important to ensure that problems in the financial sector and in the housing market do not damage wealth-creating businesses," said David Kern, economic adviser to the British Chambers of Commerce. The re-emergence of tensions in UK money markets, combined with evidence of a sharper deceleration in the housing market, has spurred the MPC into action Stuart Porteous, RBS Read Stephanie Flanders' analysis Mortgage market moves Rate cuts and you "Undue delay in acting threatens to reduce the effectiveness of interest rate cuts that the MPC itself has anticipated already." The cut had been widely forecast by economists. "So far the Bank's gradual approach to cutting rates has been the right one," said Martin Temple, chairman of the EEF manufacturers' group. "But, given how quickly the situation is changing, there are now greater risks to business and consumer confidence." Mortgage rates The UK's biggest mortgage lenders responded quickly, saying they would cut their standard variable mortgage rates by the full quarter of a percentage point. Their mortgage rates which track the Bank of England's base rate will be cut automatically also. HAVE YOUR SAY Irresponsible lending is the cause of most of our current financial issues Clive, Woking, UK Send us your commentsThe lenders that have said they will do this are the Halifax, Nationwide, Bank of Scotland, Britannia, Lloyds TSB, Cheltenham & Gloucester, First Direct, Royal Bank of Scotland, NatWest and Woolwich. Most of the rest say they say they will take from a few days to two weeks to decide how to respond. Despite this widely anticipated move by the Bank of England, many mortgage lenders have in recent weeks had to withdraw their most competitive deals for new customers. Obtaining funding from the money markets has become more costly for banks as a result of the uncertainty in financial markets and a shortage of funds caused by the global credit crisis. "This is good news for those borrowers with mortgages tracking the Bank base rate," said Michael Coogan, director general of the Council of Mortgage Lenders. "But in these dysfunctional market conditions, the base rate is not in itself a good guide to the cost or availability of funds to lenders." Before the rate decision, Alliance & Leicester said it was raising rates on its entire mortgage range for the second time this week. Nationwide said it was raising interest rates on some of its fixed-rate products by between 0.12% and 0.32% from Friday. Inflation risk BBC economics editor Stephanie Flanders says that the quarter of a percentage point rate cut indicates that the state of the UK economy is broadly in line with the Bank's expectations. That translates as slowing annual economic growth of between 1.5% and 1.75% this year, but not a recession, although inflationary pressures would still remain a problem. Credit conditions have tightened and the availability of credit appears to be worsening Bank of England Read the comments in full The Bank said inflation could remain above the government's target of 2%, but should fall back, even if the price of oil and other commodities remain at their current high levels. It did not mention the housing market in its statement, but analysts said recent downbeat news on property prices had influenced the nine-strong MPC. The Halifax, the UK's largest lender, said on Tuesday that house prices fell by 2.5% in March, the biggest monthly decline since September 1992. "The re-emergence of tensions in UK money markets, combined with evidence of a sharper deceleration in the housing market, has spurred the MPC into action," said Stuart Porteous, head of economics at RBS. Link to comment Share on other sites More sharing options...
bart Posted April 10, 2008 Author Share Posted April 10, 2008 things between the euro and the english pound are very intresting at the Mo... We are now trading at 1.22 euros to 1 pound With this rate change I think we could be heading to the 1.15 - 1.10 teorroity, and the UK may re think about joing the Euro sooner rather than later. If this happens I think it will be the final nail in the US Dollar, as the British pound is currently proctectining the rate of the US Dollar by offsetting the sale of Euros on World Money Markets Link to comment Share on other sites More sharing options...
Matter-Eater Lad Posted April 10, 2008 Share Posted April 10, 2008 Once the north american union goes through, we'll rally against the Euro. Link to comment Share on other sites More sharing options...
bart Posted April 10, 2008 Author Share Posted April 10, 2008 I have just read about this on Wikipeida.. I dont think that will happen... For starters for this to work you will need to include the likes of Venezuela. There are to many vairables within the partner countries in order to make this work. The carribean /south American countries will find it difficult to fit into this. Link to comment Share on other sites More sharing options...
Matter-Eater Lad Posted April 10, 2008 Share Posted April 10, 2008 I think most of South America wants this, a few states don't but they wouldn't matter as much, we don't need every nation to fall in line. But the American people Don't want it, but our politicians are going for it any ways. It will take a while but it'll happen. I don't know yet if that will be a good thing or not. Link to comment Share on other sites More sharing options...
bart Posted April 10, 2008 Author Share Posted April 10, 2008 I would belive some of the people in the US wont want this, due to the concerns about the stability of some of the other countries.... In sud amreica Link to comment Share on other sites More sharing options...
Matter-Eater Lad Posted April 11, 2008 Share Posted April 11, 2008 Bush wants it, and what Bush wants America wants! Link to comment Share on other sites More sharing options...
Black Rose Posted April 11, 2008 Share Posted April 11, 2008 things between the euro and the english pound are very intresting at the Mo... We are now trading at 1.22 euros to 1 pound With this rate change I think we could be heading to the 1.15 - 1.10 teorroity, and the UK may re think about joing the Euro sooner rather than later. If this happens I think it will be the final nail in the US Dollar, as the British pound is currently proctectining the rate of the US Dollar by offsetting the sale of Euros on World Money Markets The Bank of England has issued new coins, so it will be at least 10 years before the subject of joining the Euro comes up again. Viva la Pound. Thank god, my savings are locked into accounts which are guaranteeing the same amount of interest payable until September Link to comment Share on other sites More sharing options...
bart Posted April 12, 2008 Author Share Posted April 12, 2008 The Bank of England has issued new coins, so it will be at least 10 years before the subject of joining the Euro comes up again. Viva la Pound. Thank god, my savings are locked into accounts which are guaranteeing the same amount of interest payable until September why would this be the case... I think this will be up for dicussion the after the next election... it depends who wins over there... ? The UK might not have a choice if this carries on. The people in charge of the Euro have no plans to reduce intrest rates in Europe, however the Bank Of England are under prussure to keep on reducing it.. ! This in turn I will predict make the Euro even stronger. Which is fantastic for me, as if and when I take a trip outside the EU I get a lot more for my money ! Also I really do belive once the UK joins, the Euro will be the currency of choice accross the world... One thing I am a little concerned about though is the Global credit crunch and the tricle down effect.. Even though I am not in the Banking business, alot of our customers our and and they may start making cut backs one day... ! Link to comment Share on other sites More sharing options...
Black Rose Posted April 12, 2008 Share Posted April 12, 2008 Considering that labour will be out next election, as Mr Brown's scam of reducing income tax to 20% for basic rate, when getting rid of the 10% starting rate will back-fire in a massive way, with the winners being the super-rich as they pay a bit less tax and the losers being people on average wage. And also for lying to the British public about getting a vote before signing up for the EU Treaty Also for destroying rural areas by pushing up prices of living for pretty much everything. Is Spain nice to live? Link to comment Share on other sites More sharing options...
bart Posted April 12, 2008 Author Share Posted April 12, 2008 Hmm... labour may hang on with a Lib Dem pact.... I think they will be better at handling the Integration with the EU. The Torries unless they wake up relaise its the 21st century.....will take the UK backwards... In Spain they have a positve surplus in their budget, of around 5 %. The Goverment are going to give this back to the Tax Payers shortly.. Also their natinal debt is at a lower percentage than the rest of the EU countries.. Link to comment Share on other sites More sharing options...
Black Rose Posted April 12, 2008 Share Posted April 12, 2008 You only have that surplus because it's Britain's money :P Damn Spain's EU rebate, we are one of the few countries who pay more into the EU then we actually get out in return :( Link to comment Share on other sites More sharing options...
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