Letter: Manifesto for recovery

Sir: Your excellent manifesto for recovery rightly draws attention to the role of clearing banks in prolonging the present recession. If the Government does reduce interest rates to 5 per cent as you suggest, then legislation may well be needed to ensure that the banks pass on the benefit of such reductions in full to their business customers.

There are many business lending arrangements that at present stipulate a minimum rate for the charging of interest, frequently 10 per cent or more, so that a business borrower would not receive any advantage if interest rates were now cut.

To prevent recession turning into slump, the Government must urgently insist that the banks do not lock their customers into arrangements made at a time when interest rates were very much higher than is now desirable.

Yours faithfully,

MAURICE ALTON

Ottery St Mary, Devon

22 October