Interest rate cut sought by City

INDUSTRY and the City served notice yesterday that Britain is poised to slide into slump without a new lead from the Government.

Calls for early cuts in interest rates were combined with warnings that deep public spending cuts should be avoided. Howard Davies, CBI director-general, cautioned against reductions in capital spending and in education and training, saying industry should be consulted on strategic long-term spending decisions.

Keith Skeoch, chief economist of James Capel, said the next three months would determine 'whether we are heading for recovery or a slump'. The FT-SE Index sank 28.1 points to 2546.6 and the pound fell 2.58 pfennigs to DM2.4652 as the Government resisted pressure for lower rates. Sterling was also depressed by the Bundesbank's decision to leave its key rates unchanged. Page 22