The Bank of
England‘s decision to cut interest rates by 25 basis points to
5.5 per cent on December 6 was welcomed by the Retail
Motor Industry Federation‘s Sue Robinson, director of the
National
Franchised Dealers Association, who said: “With consumer
confidence fragile, the Bank of England’s decision to cut interest
rates was the right call.”
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Figures from the Society
of Motor Manufacturers and Traders show that new car sales rose
by 2.2 per cent year on year in November to 158,735 units, meaning
that year-to-date registrations are up 2.5 per cent.
Robinson added: “Car sales have continued to show growth as we
move towards the end of the year, but the slowdown in the housing
market, which is already affecting other retail sectors, could soon
impact on new car sales.”
Edward Menashy, chief economist at stockbrokers Charles Stanley
said: “Although the [Bank of England’s] Monetary Policy Committee
might have preferred to wait before reducing the base rate, the
deterioration in the UK economy has become serious with a sharp
decline in mortgage lending, faltering house prices, public sector
stimulus fading, a decline in commercial property more severe than
1980 and the word economy faltering.”
Robinson noted that softening consumer confidence could lead to
a dramatic fall in consumer spending next year, and added that the
Bank of England should review interest rates over coming months to
head off the risk of a general slowdown in spending which would
have a negative impact on showroom volumes.
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