Unions call on the Bank of England to follow US rate cuts

Although shares rocketed in London following the shock decision in the United States to cut rates by a half point, economists believe the move would not see an earlier than expected cut in UK rates.

The Footsie was up 145 points at the end of the day, but the view among analysts remained that the Bank of England's Monetary Policy Committee (MPC) will hold off from moving rates next week,despite the demand from union leaders.

The calls for a cut comes as the North-East was revealed as the second hardest hit region in the UK for job losses in manufacturing last year, according to figures from the GMB union.

The beleagured sector saw a total of 96,000 job losses during 2000, and among the worst affected areas were the Midlands, which saw 6,000 jobs lost in 2000, closely followed by the North-East with more than 5,000.

Yesterday TUC general secretary John Monks urged the Bank of England to follow the US lead and cut interest rates from the present level of six per cent.

He said: ''They are already below the Chancellor's target and their job is to try to keep to that target of 2.5 per cent inflation. They have loads of scope.''

The Federal Reserve's move was a sign it was shifting its key target from that of avoiding inflation to one of avoiding recession, said Mr Monks.

He added: ''Although we are not in recession in this country, as far as manufacturing is concerned things are grim and two out of three workers in manufacturing are working in factories where output is falling.

''That is what the Bank needs to address. By cutting interest rates they will also have some effect on the exchange rate and move us closer to where the euro is.''

And John Edmonds, general secretary of the GMB, said: ''We are seeing how the Bank of England has failed to evolve since the reign of Queen Victoria. The Federal Reserve has reacted swiftly to the threat of a downturn, whilst the Bank continues to stick its head in the sand.