Commenting on the choices facing the MPC at its November 2008 meeting next Thursday, David Kern, Economic Adviser to the British Chambers of Commerce (BCC), said:

"In the face of growing risks that the UK recession is worsening, we believe the MPC must cut interest rates to 4 per cent on Thursday. We also urge the MPC to make a further half point cut before Christmas.

"Lower interest rates, while not sufficient on their own to bring the recession to a quick end, can play a vital role in supporting business and consumer confidence, and in unfreezing the damaging paralysis in the banking sector. With UK house prices falling almost 15 per cent year-on-year, failure to cut rates by half a per cent next Thursday would be potentially harmful.

"Having acknowledged belatedly the need to take forceful measures to counter the recession, the MPC must now follow a deliberate and firm strategy. They must cut interest rates steadily, without lurching into sudden emergency measures that may unsettle the markets and damage confidence."