Rate cut prospects could change following economy slowdown

A slowdown that is worse than expected may mean that there is a greater chance of a cut in the interest rate.

During the second quarter of 2008, UK economic growth hit zero, the Office for National Statistics (ONS) has said.

This is below the original figure of 0.2 per cent growth after the information was revised by the ONS, with household spending, construction and industrial production all down.

Such a slowdown may mean that the Bank of England's monetary policy committee (MPC) will consider a reduction in interest rates sooner rather than later in the year if inflation drops from its current levels, which could be good news for debt-ridden consumers.

In fact, the MPC stated in its August interest meeting that inflation may drop in coming months as a result of flat economic growth - although it did not say this would be a certainty.

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