Brown calls on banks to pass rate reduction on

Banks have come under pressure from the prime minister to pass on the latest rate cut from the Bank of England.

The Bank announced yesterday that it would be reducing its lending rate from three per cent to two per cent – its third cut in three months.

Policymakers made the move due to concerns over the UK''s slowing economy, which is widely predicted to officially enter recession at the end of this year.

Reductions to the Bank rate are generally passed on by mortgage providers, leading to cheaper loan repayments and thereby providing an economic boost.

However, some financial firms have indicated that they will not be reflecting the full one per cent reduction in their customer loan rates.

Others, including HSBC and Lloyds TSB, have said that they will pass it on in full.

Speaking to the BBC, Gordon Brown said: "If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it''s of benefit to homeowners and businesses right across the country."