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Darling: Lenders must pass rate cut on

Monday 14th April 2008

Following the quarter-point reduction in the base rate put in place by the Bank of England this month, chancellor Alistair Darling is calling for the nations lenders to respond.

He argues that the easing of pressure that the rate cut represents must be passed on to consumers in order to maintain a robust economy, reports Reuters.

Chancellor Darling tells the newswire: "What I am saying to the banks is we have helped them.

"Therefore it is time to ensure that the banks themselves help both individual businesses and mortgage holders."

However, Reuters notes that there are fears the UK economy could instead near a recession, much like the US is currently facing.

Such predictions come in light of the news that some mortgage lenders in the UK have increased their interest charges in spite of the reduced base rate.

Meanwhile, the news service reports that the International Monetary Fund (IMF) has estimated the nations housing stock to be significantly overvalued.

Years of growth rates above ten per cent have led the typical property to be priced at up to 30 per cent above its real value, the IMF claims.

The news follows a speech by Chancellor Darling at Washingtons Brookings Institute in which he compared the current global situation to some of the greatest financial shocks of the 20th century.

He suggested that the world is currently within "the biggest economic shock since the Great Depression".

The chancellor added that the central banks of economies around the world must pull together - as they did following World War II - in order to put in place the necessary provisions to prevent financial instability on an international scale.©

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