Chief economist downbeat about British interest rate cut

The Bank of England has cut the base rate to 5.5% from 5.75%.

The move is in line with analyst's expectations and should please manufacturers.

They'd expressed concern over waning output and demand.

Since the Bank of England's monetary policy committee voted by seven votes to two on March 7 to hold the rate at 5.75% it has become apparent the global downturn is having an impact on the UK economy.

Simon Rubinsohn, chief economist at Gerrard's Stockbrokers, welcomes the cut.

He said: "0.25% was the consensus, and I think the Bank's adopting an entirely appropriate stance by taking out a bit of insurance.

Although the UK has slowed down, it's still growing despite the effects of the foot-and-mouth crisis."

But David Smith, chief economist at Williams De Broe, is downbeat about the 0.25% reduction.

He said: "Manufacturers are not the brightest people on the planet. By concentrating on demanding a cut in interest rates they are ignoring the Chancellor's fiscal policy, which is what will have the long term effect."

What Gordon Brown should have done is reduce employer's National Insurance Contributions, which would have had a highly beneficial effect."