The Bank of England has cut interest rates by 1.5 per cent, appeasing leading UK motor industry figures who have called for dramatic action in recent days.
Reducing interest rates to 3 per cent from 4.5 percent – a move that represents a significant shift in British economic policy – could boost the confidence of new car buyers and make credit more freely available from banks.
David Smith, chief executive of Jaguar Land Rover, had this morning called for “courageous and decisive action” to bring UK interest rates more in line with America’s.
The Bank of England’s landmark decision comes just a day after JLR announced 400 further redundancies from its UK factories.
Society of Motor Manufacturers and Traders (SMMT) boss Paul Everitt echoed the Jaguar boss while announcing the worst decline in cars sales since 1991 today. He called for “cuts in interest rates” to be “swiftly passed on to consumers.”
The SMMT and JLR had blamed a lack of consumer confidence for declining sales, something that interest rate cuts could help remedy.
But UK car manufacturers are still pushing for European investment to develop more efficient vehicles.