Monks - rate cut call

The unions are today calling on the Bank of England for an interest rate cut to protect manufacturing jobs.

On the day the monetary policy committee meets to decide whether to change interest rates, the TUC is calling for a quarter per cent cut.

When the committee met in January it decided to hold rates at four per cent to avoid further inflationary pressures from the housing market.

Whilst the fallout from September 11 has proved to be short lived, although a raft of redundancies and stagnation in manufacturing has prevented rates from rising.

The TUC's general secretary, John Monks, warned the wider picture across the economy was bleak.

"The 800 job losses announced by Dyson are just the latest in a long line of UK manufacturing cuts. The sector lost 146,000 jobs over the year to November 2001 and we expect another 150,000 to go in 2002. Manufacturing exports are down, output is down and investment is down," he said."With the continuing world recession, we need a rate cut to give us extra protection against the threat of recession in the rest of Europe. A cut would also help bring down the exchange rate by reducing the gap between our interest rates and rates in the Eurozone."

The Bank of England governor, Sir Eddie George, has hinted that he does not see any need for a rapid increase in interest rates.

"With inflationary pressures subdued, monetary policy generally can, for the time being at least, afford to remain reasonably supportive," he said at the weekend.

Some MPC members believe that a further cut in rates could fuel spiralling consumer debt and lead to further house price inflation.