BoE must get tough in its fight to stave off recession, says expert

A leading economist is calling for the Bank of England to get more aggressive in its battle to calm the financial crisis, starting with a base rate cut.

David Kern, chief economic adviser to the British Chambers of Commerce, says: “The BoE needs to be more proactive and cut interest rates. That way, downward pressure on the economy will be alleviated.

“We have to cut rates so that what is currently a shallow recession remains that way.”

The comments were made at an economic debate held in Westminster last week.

Kern adds: “The response to the financial crisis in this country has been inadequate.

“The Americans have been considerably more resolute about the way they are tackling the crisis and are likely to come out of it before anyone else.”

Steve Schifferes, economics correspondent for the BBC, who was also speaking at the event, agrees that the UK may fare worse in the economic downturn than the US.

He says: “Our financial sector is more vulnerable and our housing market boom was greater from peak to trough than in the US.”

But he adds: “I am not convinced that the US government’s bailout plan is saleable.

“Voters in the US are uncomfortable that a blank cheque is being handed to those who caused this david kernwe must cut base ratecrisis and an election is looming.”

A spokesman for the BoE says: “We do not comment on what other commentators have to say about us.”

Monetary Policy Committee dove David Blanchflower has also called for a rate cut to head off a prolonged slump. He cites figures that warn of two million job losses before Christmas and says the government can no longer be complacent in the face of the downturn.