Press Release

ForImmediate release

Thursday 5 June 2003

IoD not surprised interestrates unchanged

The Institute ofDirectors said that it was not surprised by the Monetary Policy Committeesdecision to leave interest rates at 3 %. But it added that it expected afurther cut (or cuts) later this year.

The IoD said that themanufacturing sector had resumed its downward path with survey materialcontinuing to show an under-performing sector. The sector had been in recessionfor about two years and, given the poor world outlook, was unlikely to recoverin the near future despite the weaker pound (against the euro). Retail salesgrowth has slowed significantly and consumer credit growth seemed to be weakeningon an underlying basis. In addition, there were increasing signs that thehousing market has come off the boil, especially in London and the South-East,despite some strong numbers for May.

Ruth Lea, Head of thePolicy Unit, said:

"This monthsdecision by the Monetary Policy Committee to leave rates unchanged does notsurprise us. Burt we expect further easing later this year. There is littledoubt that the global economy is in the doldrums with the major economies allhaving deep-seated problems; Germany is of particular concern.

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The poorinternational outlook continues to drag the British economy down. Moreover,domestically, consumer spending and the housing market, the parts of theeconomy that underpinned growth last year, do now seem to be moderating. Andthe tax increases will damage business and consumer confidence. The hugeincreases in public spending will, however, support GDP growth. But, on balancethese factors are contributing to slower growth.

Ends 5.6.03 No.172

Note to Editors

The IoD (Institute ofDirectors) is a non-party political independent organisation with around 55,000members. In addition to its wide range of business services, the IoD providesan effective voice to represent the interests of its members to government andkey opinion-formers. It also brings he experience of business leaders to bearon the conduct of public affairs.

Contact Points:

Ruth Lea, Head of thePolicy Unit, tel: 020 7451 3291

Richard Taylor, PressOfficer, tel: 020 7451 3264

mobile and out of hours: 07721 734886

David Marshall,Director of Public Affairs, tel: 020 7451 3263

mobile and outof hours: 0776 4883420

email: press@iod.com

web: www.iod.com