Jump directly to the content
RATE BRITAIN

Lenders clash with Bank of England after trying to avoid passing decreased interest rates on to customers

Project Fear doomsday predictions have been proven wrong, but there will still be preventative measures against a dramatic slowdown

LENDERS yesterday clashed with the Bank of England over their plans to delay passing on interest rate cuts to customers.

Governor Mark Carney said there was “no excuse” not to do so after dropping the base rate to 0.25 per cent.

Bank of England Governor Mark Carney admitted the UK will not be plunged into a recession after launching measures to boost the economy to prevent downturn - but low interests on loans may not be passed on to borrowers
6
Bank of England Governor Mark Carney admitted the UK will not be plunged into a recession after launching measures to boost the economy to prevent downturn - but low interests on loans may not be passed on to borrowersCredit: PA:Press Association

RBS, the biggest lender, has not set a date for passing on the lower rate, but said it would keep it “under review”.

Mortgage and loan customers with firms including Virgin, Halifax and Coventry Building Society face delays of up to three months before they see cheaper payments.

Lenders said their terms and conditions state rate changes can only be imposed after a certain period.

Barclays, however, announced that it was passing on the benefits to mortgage customers.

A spokesperson said: “Customers with Barclays Bank Base Rate Tracker mortgages and customers on the Barclays Standard Variable Rate will see their rates reduce by 0.25 per cent. We will provide advance notification to those customers whose mortgage payments will change.”

Interest rates have been lowered for the first time since 2009, but banks have stalled in passing low rates on to customers despite Mark Carney's insistence they have "no excuse" not to
6
Interest rates have been lowered for the first time since 2009, but banks have stalled in passing low rates on to customers despite Mark Carney's insistence they have "no excuse" not toCredit: Getty Images

Mr Carney unleashed a “triple whammy” of measures amid predictions of an economic slowdown. But he insisted the UK will not be hit by a Brexit recession.

Interest rates were lowered for the first time since the height of the financial crisis in 2009 from 0.5 per cent — a win for borrowers but not for savers.

Carney conceded "the UK can handle" the potential difficulties of negotiating Brexit and that there will not be a recession
6
Carney conceded "the UK can handle" the potential difficulties of negotiating Brexit and that there will not be a recessionCredit: Getty Images

A £100billion scheme to force banks to pass on the cut to households and businesses was also unveiled.

And £70billion of money printing known as “quantitative easing” was ordered, with £10billion going to help private sector firms.

Mr Carney said they would soften the impact of Brexit.

He warned the effects “may prove difficult” — but was forced to concede: “The UK can handle it.”

RELATED STORIES

Bank of England governor Mark Carney pledges £150BILLION to banks as pound reaches new low
BANK ON IT

Bank of England governor Mark Carney pledges £150BILLION to banks as pound reaches new low

Stock market soars to 10 month high as Bank of England governor hints at interest rate cut
rate cut on cards

Stock market soars to 10 month high as Bank of England governor hints at interest rate cut

What does the Bank of England's interest rate cut mean for you?
Are you better off?

What does the Bank of England's interest rate cut mean for you?

Bank of England has cut interest rates to historic low of 0.25% to ward off the threat of recession
RATE CUT revealed

Bank of England has cut interest rates to historic low of 0.25% to ward off the threat of recession

Former Chancellor George Osborne, who led the Project Fear campaign, praised the “triple whammy”.

But Leave campaigners and some economists said the measures were an unnecessary knee-jerk reaction to early signs of market jitters.

Ex-Chancellor George Osborne has praised the "triple whammy" - like Carney, he had predicted a post-Brexit recession
6
Ex-Chancellor George Osborne has praised the "triple whammy" - like Carney, he had predicted a post-Brexit recessionCredit: PA:Press Association

Tory former minister John Redwood said: “They are calming down gradually but they still don’t want to admit they were completely wrong so they are claiming we are going to avoid recession because they are pumping in the money.

“They want to claim credit for avoiding the recession that was never going to happen.”

And Timothy Graf, head of macro strategy at State Street Global Markets EMEA, said: “I am surprised that they decided to implement a number of measures to address the problem at such an early stage.”

Tory MP John Redwood has criticised the Bank for wanting to take credit for " avoiding the recession that was never going to happen"
6
Tory MP John Redwood has criticised the Bank for wanting to take credit for " avoiding the recession that was never going to happen"Credit: Alamy

The Bank’s measures came as it announced the biggest cut in growth forecasts since it started them in 1993.

It said the economy would almost flatline between July and September and then grow by just 0.8 per cent next year, well down from the 2.3 per cent it had predicted.

It also forecast higher unemployment and inflation.

Chancellor Philip Hammond has welcomed the measures, and says Britain will now be able to enter the transition period from a place of strength
6
Chancellor Philip Hammond has welcomed the measures, and says Britain will now be able to enter the transition period from a place of strengthCredit: PA:Press Association

But Chancellor Philip Hammond said the UK was well placed to make a success of Brexit as he welcomed the measures.

Mr Hammond said: “As recent figures on jobs and growth have shown, we enter this period of adjustment from a position of economic strength.

“And the Governor and I have the tools we need to support the economy as we begin this new chapter and address the challenges ahead."

 

Topics
YOU MIGHT LIKE
RECOMMENDED FOR YOU
MORE FOR YOU