Business leaders and unions in Scotland have urged banks to pass on the latest interest rate cut to customers.
Business leaders and unions in Scotland have urged banks to pass on the latest interest rate cut to customers.
The Bank of England has announced it is to slash interest rates to 3% - its lowest since 1955 - in a bid to stimulate the economy.
The Bank of England has announced it is to slash interest rates to 3% - its lowest since 1955 - in a bid to stimulate the economy.
There had been widespread calls for a major cut as the UK faces up to the prospect of a deep recession.
There had been widespread calls for a major cut as the UK faces up to the prospect of a deep recession.
The move has been welcomed in Scotland as a "bold decision" and a "welcome relief to businesses".
The move has been welcomed in Scotland as a "bold decision" and a "welcome relief to businesses".
Last month, the Bank of England cut rates from 5% to 4.5% in an emergency move co-ordinated with other central banks. That figure has now been reduced by a further one-and-a-half percentage points.
Last month, the Bank of England cut rates from 5% to 4.5% in an emergency move co-ordinated with other central banks. That figure has now been reduced by a further one-and-a-half percentage points.
It is the first time the Bank of England has cut rates by more than half a percentage point since gaining its independence in 1997.
It is the first time the Bank of England has cut rates by more than half a percentage point since gaining its independence in 1997.
Grahame Smith, general secretary of the Scottish Trades Union Congress (STUC), said: "The monetary policy committee should be commended for this bold decision. This bold decision is the clearest possible indication that the Bank of England means business Liz CameronScottish Chambers of Commerce
Grahame Smith, general secretary of the Scottish Trades Union Congress (STUC), said: "The monetary policy committee should be commended for this bold decision. This bold decision is the clearest possible indication that the Bank of England means business Liz CameronScottish Chambers of Commerce
"Members have clearly recognised that a gradualist approach is no longer appropriate given the exceptional economic challenges currently facing the UK economy.
"Members have clearly recognised that a gradualist approach is no longer appropriate given the exceptional economic challenges currently facing the UK economy.
"The hope is that this unprecedented cut will partially compensate for the MPC's hesitancy over the summer and help to cushion the fall into recession. The banks must now act to pass on the rate cut to their customers."
"The hope is that this unprecedented cut will partially compensate for the MPC's hesitancy over the summer and help to cushion the fall into recession. The banks must now act to pass on the rate cut to their customers."
A spokesman for CBI Scotland said: "Firms across Scotland will warmly welcome this decisive action by the Bank of England. This is a bold move and achieves what the CBI has been calling for.
A spokesman for CBI Scotland said: "Firms across Scotland will warmly welcome this decisive action by the Bank of England. This is a bold move and achieves what the CBI has been calling for.
"Our own surveys show that Scottish industry faces deteriorating conditions, with recession replacing inflation as the main threat in the immediate future.
"Our own surveys show that Scottish industry faces deteriorating conditions, with recession replacing inflation as the main threat in the immediate future.
"This bumper rate cut should provide welcome relief to businesses, and allow banks to pass on the benefits to their customers."
"This bumper rate cut should provide welcome relief to businesses, and allow banks to pass on the benefits to their customers."
'Key ingredient'
'Key ingredient'
Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "This represents a very substantial reduction in interest rates and should therefore send the right signals to Scottish businesses that the Bank of England is serious about addressing the challenges presented by the economic slowdown.
Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "This represents a very substantial reduction in interest rates and should therefore send the right signals to Scottish businesses that the Bank of England is serious about addressing the challenges presented by the economic slowdown.
"With inflation worries set to ease over the next few months, it is essential for both business and consumer confidence that interest rates are low.
"With inflation worries set to ease over the next few months, it is essential for both business and consumer confidence that interest rates are low.
"The goal is to ensure that the economic downturn is as short and shallow as possible. This bold decision is the clearest possible indication that the Bank of England means business." Lenders have both a financial and moral duty to cut their mortgage rates accordingly Graeme BrownShelter Scotland
"The goal is to ensure that the economic downturn is as short and shallow as possible. This bold decision is the clearest possible indication that the Bank of England means business." Lenders have both a financial and moral duty to cut their mortgage rates accordingly Graeme BrownShelter Scotland
John Wright, national chairman of the Federation of Small Businesses, said: "We called for a bold 1% cut and this unexpectedly large rate cut will make an enormous difference to small firms and will put money in people's pockets before Christmas.
John Wright, national chairman of the Federation of Small Businesses, said: "We called for a bold 1% cut and this unexpectedly large rate cut will make an enormous difference to small firms and will put money in people's pockets before Christmas.
"But all this will come to nothing if the banks do not follow through and pass on the rate cuts to those small firms struggling with increased costs of credit."
"But all this will come to nothing if the banks do not follow through and pass on the rate cuts to those small firms struggling with increased costs of credit."
Homes for Scotland warned that the reduction must be quickly passed on to home buyers in order to kick-start the pressurised housing market.
Homes for Scotland warned that the reduction must be quickly passed on to home buyers in order to kick-start the pressurised housing market.
Chief executive Jonathan Fair said: "Lenders must be persuaded to pass this substantial reduction on at the earliest opportunity.
Chief executive Jonathan Fair said: "Lenders must be persuaded to pass this substantial reduction on at the earliest opportunity.
"The events of recent months have demonstrated the enormous impact the housing sector has on the whole economy. There are two issues at stake here - people are anxious about moving house and this is stagnating the market.
"The events of recent months have demonstrated the enormous impact the housing sector has on the whole economy. There are two issues at stake here - people are anxious about moving house and this is stagnating the market.
"In addition, housing provision, so vital to Scotland's economic development, will be at serious risk if continued decisive action is not taken."
"In addition, housing provision, so vital to Scotland's economic development, will be at serious risk if continued decisive action is not taken."
Graeme Brown, director of Shelter Scotland, said: "This interest rate cut gives lenders a golden opportunity to throw a lifeline to cash-strapped homeowners who are facing crippling household costs.
Graeme Brown, director of Shelter Scotland, said: "This interest rate cut gives lenders a golden opportunity to throw a lifeline to cash-strapped homeowners who are facing crippling household costs.
"If passed on, it would mean a household paying a mortgage of £150,000 would see an average monthly saving of around £134.
"If passed on, it would mean a household paying a mortgage of £150,000 would see an average monthly saving of around £134.
"Many of the lenders failed pass the cut on to borrowers last month. With this significant rate cut by the Bank of England, lenders have both a financial and moral duty to cut their mortgage rates accordingly."
"Many of the lenders failed pass the cut on to borrowers last month. With this significant rate cut by the Bank of England, lenders have both a financial and moral duty to cut their mortgage rates accordingly."
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