Could interest rates go even lower?

A reduction in the base rate from 0.5 per cent to 0.25 per cent is no longer unthinkable.

With just a month to go until his autumn statement, the latest set of growth forecasts make grim reading for George Osborne. Ernst and Young's Item club predicts that the economy will grow by just 0.9 per cent this year, well below the 1.4 per cent it predicted three months ago. It has also downgraded its 2012 growth forecast from 2.2 per cent to 1.5 per cent.

Peter Spencer, the body's chief economic adviser explains:

It's worse than we thought. The bright spots in our forecast three months ago - business investment and exports - have dimmed to a flicker as uncertainty around Greece and the stability of the eurozone increases.

Significantly, the club uses the same forecasting methods as the Office for Budget Responsibility (OBR), offering us a preview of the downward revisions the OBR will have to make when it publishes its new estimates on 29 November, the day of Osborne's statement. Lower growth, of course, means higher borrowing, so the OBR is also likely to revise its deficit forecasts upwards. The club predicts that unemployment will rise from 2.57m to 2.7m over the next 18 months, resulting in lower tax revenues and higher welfare payments.

In response, it calls for a cut in stamp duty for first-time buyers and a reduction in interest rates from their current record low of 0.5 per cent to 0.25 per cent. The Monetary Policy Committee (MPC) has held the base rate at 0.5 per cent since March 2009 but it's worth noting that the possibility of reducing it even further was discussed at the last Bank of England meeting. The most recent BoE minutes (from 7-8 September) noted that the MPC "revisited the earlier decision not to lower Bank Rate below 0.5 per cent".

A reduction to 0.25 per cent still seems unlikely but, given the parlous state of the British economy, I'd expect that the MPC is ruling nothing out. As Mervyn King said when he announced another round of quantitative easing, "When the world changes, we change our policy response".

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Telegraph fires environmental journalist Geoffrey Lean

Some have suggested the move is due to the newspapers' scepticism about man-made climate change. 

Geoffrey Lean, the respected enviromental commentator and reporter, has been "pushed out" of the Telegraph, according to the writer. Lean, who pioneered the role of environmental correspondent almost forty years, joined the Telegraph in 2009 after 16 years at the Independent. "Telegraph is pushing me out," Lean tweeted a few days ago. The Telegraph's International Business Editor, Ambrose Evans-Pritchard, tweeted "Departure of climate veteran @GeoffreyLean v sad for Telegraph colleagues. Conservative newspaper has lost a tireless voice for conservation". 

The loss of the respected Lean, some believe, is due to his longstanding support for the idea that climate change is manmade. 

I'm a mole, innit.