Bank cuts base rate

The Bank of England has opted to cut the base rate of interest by a quarter-point to five per cent, it has been announced.

With millions of consumers struggling to maintain control of their debt management problems, the base rate reduction has been widely welcomed but experts are unsure about how much impact the decision will have.

A statement from Abbey said: “It is unclear whether the size of the rate cut provides the adrenaline shot needed to restore confidence amongst borrower.”

The banking group went on to point out that the cut in the cost of borrowing will take some time to feed through into the overall economy and provide any kind of boost for household finances.

Borrowing costs were cut by a quarter-point in December of last year and February 2008 but for millions of families the action has not prevented debt problems from worsening.