Economist forecasts base rates will plummet

An economist has predicted that the Bank of England base rate will fall as low as four per cent next year, a move which could make borrowing to buy land for self build cheaper.

Howard Archer, chief economist at Global Insight, said: "We currently forecast interest rates to fall to 4.5 per cent by the end of 2008 and to four per cent in the first half of 2009," reports Money Magic.

Mr Archer stated this forecast was based on the UK having "below trend growth" over this period.

The prediction follows that of Halifax chief economist Martin Ellis yesterday, who forecast the Bank would cut rates "at least twice" this year.

Most of the economists polled by Reuters and Bloomberg have forecast that the monetary policy committee will cut the base rate to 5.25 per cent tomorrow.

This view was held by all 60 who spoke to Reuters and 58 out of 61 surveyed by Bloomberg.


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