Too Late For Retailers

The Bank of England has given the high street a glimmer of hope, but today’s rate cut is likely to be a case of too little, too late for retailers battling the fallout from the global credit crunch.

Store chiefs have been calling for rates to come down for the best part of two months, in an attempt to shore up consumer confidence in the run-up to the critical Christmas trading period.

Even Tesco took the unprecendented move of joining the call for the Bank of England to act when, on Tuesday, its finance director Andrew Higginson urged Mervyn King to forget inflationary fears and cut.

Alexon, the home of the Bay Trading fashion chain, today became the fifth retailer to issue a profit warning in the past month and the quarter-point rate cut will not prevent others being forced to follow suit.

Mortgage companies are clamping down on lending criteria and are unlikely to be in a rush to pass on cheaper borrowing costs.

Therefore cash-strapped consumers, many coming off cheap fixed-rate home loans, will see little change in their disposable income.

For this, a second interest rate cut is needed in the new year, when many analysts believe retailers will really begin to feel the pinch from the current slowdown.

As the British Retail Consortium said today: “The sooner the Bank delivers the next one, the better.”

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