'Aggressive response' to downturn sought from Bank of England in base rate announcement later today
Industry figures have called for a further cut in interest rates by the Bank of England's Monetary Policy Committee this afternoon.
Amid fears that the downturn will be deeper and longer than first thought, some in the UK construction and property sectors are calling for a cut of one percentage point to 2%.
Simon Rubinsohn, chief economist at the RICS, said: “Output now looks likely to contract by at least 1.5% in 2009 with no hiding place outside of the public sector. As a result, a further aggressive response is warranted by the Bank of England in an effort to avert an even worse outcome.
“Base rates need to be cut by a full one percentage point at this week's meeting as part of the shock treatment to instil some life into the moribund patient.”
Other leading economists, including George Buckley at Deutsche Bank, have called on the Bank of England to act aggressively to lessen the impact of the downturn.
Last month it made a dramatic cut in rates, from 4.5% to 3%. A further cut to 2% would see the rate fall to its lowest level since 1951.