Please drop interest rates now

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I listened to Yvette Cooper this morning saying how help was needed for hard-pressed families who could not meet their mortgage obligations and for companies in tight negotiations on their overdraft limits.

She is right: both situations are very real. But she refused to consider any form of regulation to help them. Worse she simply ignored the obvious thing that could ease pressure at this time, which is a significant cut in interest rates, now.

George Osborne is currently talking about giving businesses VAT holidays: that is the height of fiscal irresponsibility. It is literally throwing taxpayers money away. Cutting interest rates is the complete opposite: it changes the fundamental economics of the situation and it would address the very real fear of deflation that most informed economists now have.

If Yvette Cooper and her colleagues are not willing to demand this from the Bank of England then they are not doing their job. In fact, they would be failing in their duty if they did not do the following three things:

1) Require that the Bank of England meet weekly to consider interest rates changes: we are in a crisis;

2) Revise the terms of reference for the Monetary Policy Committee so that they may take the risk of recession into account when setting interest rates;

3) Demand a cut in rates now or the head of Mervyn King.