Retailers demand festive interest rate cut

Struggling retailers are demanding a confidence-boosting cut in interest rates this week to kickstart the festive season on the high street.

'Christmas is going to be challenging, but it could be better if we get a cut in rates,' said Kevin Hawkins, director-general of the British Retail Consortium, which is set to reveal that October saw the seventh successive monthly decline in high street sales.

But Bank of England policymakers are expected to leave borrowing costs on hold until the New Year, as they monitor the impact of surging oil prices on inflation. 'We don't expect any fireworks this month,' said Ross Walker, of Royal Bank of Scotland.

The British Chambers of Commerce, which represents many small businesses, echoed Hawkins's demands, calling on the Bank's Monetary Policy Committee to seriously consider cutting rates.

As the Bank prepares to disappoint consumers, Roger Bootle, adviser to Deloitte and Touche, says in his quarterly healthcheck of the economy that strong growth from the corporate sector offers the best hope of recovery.

'Two bits of the economy that have been strong - consumers and government - now look like being weak,' he said. 'So the corporate sector will fall under the spotlight.'