Northern industry leaders welcome interest rate cut

A surprise quarter-point cut in British interest rates, which has reduced the rate to its lowest level in two years, will deliver an important psychological boost for manufacturers in Northern Ireland, according to industry chiefs.

The Bank of England's monetary policy committee (MPC) said yesterday that it had decided to cut rates to 5 per cent in order "to keep inflation on track to meet the 2.5 per cent inflation target in the medium term".

Latest figures show inflation in the UK remained at a two year high of 2.4 per cent in June. The MPC said both inflation and the persistent strength of sterling had increased pressures on externally exposed sectors of the UK economy.

"There are signs of weakening investment growth but, by contrast, retail spending, household borrowing and the housing market are still robust, partly supported by recent reductions in interest rates," the bank said.

Industry, homeowners and consumers in Northern Ireland will be the biggest beneficiaries of the latest move in UK interest rate, the fourth successive rate cut this year.

The UK's largest mortgage lender, Halifax, immediately cut its standard variable mortgage yesterday to 6 per cent and many high street banks also followed its example. The unexpected cut came as a welcome relief to manufacturers in Northern Ireland, according to the Confederation of British Industry.

Mr Nigel Smyth, director of the industry body in the North, said it believed the rate cut was proof that the Bank of England had listened to the concerns of businesses.