A BUSINESS group in Huddersfield today welcomed the Bank of England’s emergency 0.5% interest rate cut – but said further reductions in the cost of borrowing were needed to help kick-start the stagnant UK economy.
Steven Leigh, senior policy adviser for the Lockwood-based Mid Yorkshire Chamber of Commerce, said: “We welcome this very necessary half-point reduction. Our chamber has been calling for the last six months for the Monetary Policy Committee to reduce rates.
“This cut will now hopefully steady the markets and inject some much-needed confidence into the business sector.
“Alleviating the dangers of a major downturn must now be the overriding priority for the MPC. We hope to see further interest rate reductions over the next few months.”
The base rate reduction came as Huddersfield MP Barry Sheerman met Halifax Bank of Scotland chief executive Shane O’Riordan to discuss its looming takeover by rival Lloyds TSB – and stress the need to protect the jobs of thousands of Halifax employees in West Yorkshire.
Mr Sheerman said he had been unable to convince Mr O’Riordan that it would be better for HBOS to maintain its “integrity and independence” by a part-nationalisation of the business rather than pursuing a merger which would create a massive bank commanding a third of the market.
However, the Labour MP, who is now seeking a meeting with Lloyds TSB chief executive Eric Daniels, said he had pressed the case for safeguarding jobs at the Halifax.
“The serious work of HBOS is done in West Yorkshire, where we have a very large, well-trained and highly professional workforce dealing with most of the mortgage and savings accounts of the whole business,” he said.
“The merger would be crazy to detract from that and not keep the focus of this work in Yorkshire.”
The Bank of England’s decision yesterday to cut rates by 0.5% to 4.5% came as part of a coordinated global effort by central banks to calm the financial crisis.
As part of that effort, a package of measures announced by Chancellor Alistair Darling will see taxpayers fund a £50bn part-nationalisation of the UK’s biggest banks to help halt the meltdown in the financial sector.
Eight UK banks and building societies, including Royal Bank of Scotland, Barclays, HBOS, Lloyds TSB and Nationwide, have signed up to an initial £25bn scheme.
The Government said it stood ready to make at least another £25bn available for other eligible institutions.
Alongside its interest rate reduction, the Bank of England is also taking emergency action to help ensure that banks have enough cash to run their day-to-day activities by pumping £200bn into money markets under its existing Special Liquidity Scheme.
The Government is also making a further £250bn available for banks to guarantee debt.
Mr Sheerman praised the moves, saying: “This is the smack of firm government. It is necessary to maintain our country as one of the world’s leading economies.
“We are in the eye of the storm and we do not know all the repercussions, but all the financial experts I have spoken to believe the government is handling things just about right.”