PressRelease

Forimmediate release

Thursday10 April 2003

IoD still waiting for interestrate cut

The Institute ofDirectors (IoD) said that it was not surprised by the Monetary PolicyCommittees decision to leave interest rates at 3 %. But it added that itexpected a further cut - or cuts - later this year.

The IoD said that themanufacturing sector still seemed to be weak, despite the Februarys surpriseincrease in the official data; survey material continued to show anunder-performing sector. The sector had been in recession for about two yearsand, given the poor world outlook, was unlikely to recover in the near futuredespite the weaker pound (against the euro). Retail sales growth has slowedsignificantly and consumer credit increases, at last, seemed to be weakening onan underlying basis. In addition, there were increasing signs that the housingmarket was coming off the boil, despite recent house price increases especially in London and the South-East.

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, which the expected successful outcome in Iraq willnot resolve. An end to hostilities will certainly help the world economy butit wont cure its problems.

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The poor internationaloutlook continues to drag the British economy down. Moreover, domestically,consumer spending and the housing market, the parts of the economy thatunderpinned growth last year, do now seem to be moderating. And the increase inemployees National Insurance Contributions will damage consumer confidence.The huge increases in public spending will, however, support GDP growth. But,on balance these factors are contributing to slower growth and we were notsurprised to see the Chancellor downgrade his forecasts in yesterdays Budget.

Ends 10.4.03 No.163

Notes to Editors

The IoD (Institute of Directors) is a non-partypolitical independent

organisation with around 55,000 members. In additionto its wide range of

business services, the IoD provides an effectivevoice to represent the

interests of its members to government and keyopinion-formers. It also brings

the experience of business leaders to bear on theconduct 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