Press Release

Forimmediate release

Tuesday5 August 2003

IoD says no change in interestrates

The Institute ofDirectors (IoD) said today that the Bank of England's Monetary Policy Committeeis highly unlikely to cut interest rates this week. This, indeed, would be theright decision, the IoD added.

The IoD said that ithad welcomed last months cut from 3% to 3% because of the poor economicoutlook, but said there are now some very tentative signs that the economicsituation is improving. Manufacturing output picked up modestly in June andthere was recently a pick-up in retail sales (driven by increasing personalindebtedness). Nevertheless it was far too soon to talk of a significantrecovery in the private sector and exports would continue to be dragged down bythe depressed global outlook. In addition, the housing market had probably comeoff the boil, especially in London and the South-East.

Ruth Lea, Head of thePolicy Unit at the IoD, said:

"We do notexpect a cut in interest rates this week and there should not be one giventhe predilection for the British consumer to accumulate debt. But, having saidthat, we do not expect a robust recovery in the second half of this year.Moreover, the economy is badly out of balance with weakness in many parts ofthe private sector, including manufacturing, but buoyancy in others includingthe bloated public sector, construction and retailing.

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"Theglobal situation continues to be a concern, even though there are some moreencouraging signs out of the Eurozone countries and, particularly, the US. Andwe do not expect a return to rapid growth in the near-term. This willinevitably hold back Britains export sector.

Ends 5.8.03 No.188

Notefor editors

TheInstitute of Directors is a non-party political independent organisation witharound 55,000 members. In addition to its wide range of business services, theIoD provides an effective voice to represent the interests of its members togovernment and key opinion-formers. It also brings the experience of businessleaders to bear on 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