Yesterday’s Bank of England Monetary Policy Committee (MPC) decision to cut interest rates from 4.75 per cent to 4.5 per cent, provoked worried reactions.
The Transport and General Workers’ Union said the quarter per cent cut was ‘a belated gesture which is too little too late for the tens of thousands in manufacturing who have lost their jobs in the last year’.
TGWU national organiser for manufacturing Peter Booth said: ‘UK interest rates are still over double those of our competitors in Europe. This cut makes no inroad into that chasm which continues to put our manufacturers at a disadvantage.’
He added: ‘Our people face situations where companies are struggling to stay afloat, closing or calling in the administrators on a depressingly regular basis.
‘We need to have leadership from the Bank of England not timidity.’
TUC Deputy General Secretary Frances O’Grady said: ‘This was the correct decision and will come as a huge relief to the manufacturing sector, which faces huge difficulties. Now the challenge is to lift manufacturing out of recession and try to stop the steady rate of job losses which has seen more than 75,000 manufacturing employees made redundant in the last year alone.
‘Today’s rate cut was a start, but the MPC must not shy away from further action if that proves necessary.’
But the bosses’ British Chamber of Commerce (BCC) issued a stark warning.
Its Director General, David Frost, warned: ‘While today’s cut in interest rates should alleviate some of the most acute pressures facing the economy, the UK economic climate has worsened and we are facing new dangers.
‘Given the risks facing UK businesses, and manufacturing in particular, we urge the MPC to remain vigilant. Further interest rate cuts should be considered later in the year.’
The CBI said it ‘warmly welcomed’ the Bank of England’s decision to reduce interest rates to 4.5 per cent.
CBI Director General Sir Digby Jones said: ‘This cut will be a catalyst for growth and will provide an essential boost to consumer and business confidence.’
He added ominously: ‘The Bank will want to keep a watchful eye on the economy to gauge the impact of this reduction as a further cut might be necessary later in the year.’
Steve Radley of the Engineering Employers Federation said: ‘This cut is a timely and proportionate response to an economic situation which is now flashing amber.’
Revealing the state of the British economy, British Chambers of Commerce Director General David Frost continued: ‘British business has expected today’s MPC’s decision to cut interest rates to 4.5 per cent.
‘We believe the MPC has made the right decision. The economic situation has worsened, and the case for a cut in interest rates was compelling.
‘Most recent economic figures point to a further sharp slowdown in UK activity.
‘Preliminary figures for Q2 2005 show quarterly GDP growth slowing to only 0.4 per cent.
‘Year-on-year GDP growth was down sharply to 1.7 per cent, well below trend.
‘The results of the BCC’s recent QES show worrying declines in confidence and a marked deterioration in the service sector.
‘Official figures show that manufacturing, and the wider industrial sector, fell in the first two quarters of 2005, and both are in technical recession.
‘Unemployment on the claimant count measure has risen in each of the last five months, by a cumulative total of more than 51,000.’
Clearly the trade unions have a duty to their members to take action to bring down the Blair government, to go forward to a workers’ government that will carry out socialist policies.
• Second news story –
‘Don’t let DUP delay’ – Adams tells Blair
Sinn Fein chief negotiator Martin McGuinness has called on Democratic Unionist Party (DUP) leader Ian Paisley to stop blocking a return to devolved government in the north of Ireland.
Speaking after meeting British prime minister Blair at Downing Street, McGuinness said the DUP had to ‘regain their nerve’ and recognise they had a major contribution to make to the peace process.
He added: ‘The ball game has changed, changed completely and I think forever.
‘At some stage the DUP will have to respond to an agenda which is very clearly moving on without them.’
Sinn Fein President Gerry Adams added he believed that the outstanding elements of the Good Friday Agreement would be implemented ‘in the period ahead’.
After a ‘blunt’ separate meeting with Blair, Paisley said: ‘We are not going to have any discussions about devolution until the requirements Mr Blair set out are fulfilled by the IRA.
He added that the IRA had made a statement but had done nothing about keeping their obligations.
Paisley called for ‘total decommissioning that everyone can be satisfied with’.
Commenting on the IRA pledge to lay down its arms, DUP deputy leader Peter Robinson added: ‘It will take a long period of time to make sure that they are gone and they are gone for good.’
Paisley said he had presented a list of demands to Blair.
These included assurances relating to Northern Ireland Secretary Peter Hain’s announcement that the government planned to disband the three battalions of the Royal Irish Regiment based in the north of Ireland.