The Bank of England has cut interest rates by 1.5% to 3.0% which is below the Eurozone interest rate which has also dropped today to 3.25%.
This cut is pointless. British banks for the most part don't have enough deposits to cover there lending by a gap of some £700 billion. They have to borrow from the Libor markets which ultimately means from people who do not care what the Bank of England base rate is.
The net effect of course is that banks who have to honour tracker deals will have less money available to lend on new deals.
In other words Gordon Brown has lost complete control of Tue economy, unless he can replace the £700 billion the banks have got from overseas.
The BBC has this and this.
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1 comment:
Quite true. Many optimistic comments, articles and blogs were written like the one at www.themoneyferret.co.uk. But seems like at the end of the day all cries have fallen on deaf ears!
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