WHAT IS HAPPENING TO INTEREST RATES?

Those who appear to be ‘in the know’ are predicting that there will be a further interest rate cut on Thursday 18^th of December. That might seem to be good news for many but is it?

There was nearly a cut in November. Those who take the big decision are the Bank of England’s Monetary Policy Committee. There are nine of them and November’s vote saw four of those members vote in favour of a further cut. That was the closest for some time.

It seems that many with large savings are urgently seeking alternatives to protect their nest-eggs. Are they over-reacting?

The European Central Bank has been working hard to cut its main interest rate and earlier this year achieved a drop to 2%. In America the Federal Reserve cut its bank rate to between 3.75% and 4%.

If you have savings that could present a problem in that your reserve is likely to fall in value. If you have a mortgage that is better news but for many it is too late.

Repossessions are already at their highest level for years and the signs are that the peak has not yet been reached.

Heat and power bills have reduced a little – at least for a while – and that accounts for the inflation figures looking a little brighter. However, general shopping seems to rise every week and the faces of those shopping are looking more and more stressed.

Is there an answer?

“There is always an answer,” said Perry Offer. “When Margaret Thatcher became Prime Minister in 1979 she inherited a worse economy than this. She tackled it bravely in that it did not make her very popular. However, she succeeded and often said that her greatest moment was when she saw that Britain had finally got into the black again after years of going further and further into the red. Thatcher’s heritage has been destroyed but her methods could work again. Cut out the incredible financial wastage we have, stop pandering to people who demand much but contribute nothing. Cut back on the excessive rules and complications that strangle enterprise and there is a good chance we can recover once again. We need to find the same kind of leadership we had in Margaret Thatcher. I’m still looking…..”