02 August 2024
Julie White welcomes rate cut in BBC interview
D-Drill & Sawing Managing Director Julie White has welcomed the interest rate cut in an interview with the BBC World Service
The Bank of England cut rates from 5.25 per cent down to five per cent and also forecast that the UK economy would grow by 1.25 per cent this year.
Julie said: “Businesses will welcome the fact that interest rates have dropped to five per cent from a 16 year high of 5.25 per cent – but it is still much, much higher than the low of 0.1 per cent, which is where it was as we emerged from Covid.
A fall in interest rates should mean that it’s slightly cheaper to borrow money and that will hopefully encourage businesses to invest in new technology and new equipment. This can be part of a driving force for economic growth.
It’s worth noting that the Bank of England has said that rates are going to fall much more slowly than they were increased so while it’s good news that they’ve come down, businesses won’t expect rates to get back down to that record low of 0.1 per cent. It’s vitally important that banks pass on the reduction to those borrowing and that businesses can feel the benefit of this cut.
In construction, there was a slow start to the year – but that wasn’t all down to the higher interest rates – there have been a lot of factors that have created uncertainty and, then with the general election being called, it felt like a lot of decisions were being put on hold.
Now, we have a new Government that is making building new homes and improving planning a major priority and, therefore, we hope that this can have a very quick and positive knock-on effect for our business and our industry.
It’s interesting to see that the Bank of England also thinks the economy will grow more quickly this year – now forecasting 1.25 per cent growth which is up from the 0.5 per cent predicted in May. The question is, do we want interest rates to continue to be cut? Yes, we would like to see further cuts to give businesses some breathing room to be able to borrow, invest and grow.
However, the reason the Bank increased rates so sharply was to try to get inflation down. So, it is a very fine balance because we do not want to see inflation kicking in again because that causes a major headache for businesses because it means it is difficult to control costs. Therefore, the steady as she goes approach to cutting rates might be the best one.”
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