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Who would benefit most if interest rates fell to 0%?

As the banking sector continues to hold firm in maintaining and improving profit margins there would appear to be some confusion as to who would benefit most if UK base rates, as expected, fall to around 0%. Many of the UK banks have already come out and stated they will not pass on any more interest-rate reductions to their tracker mortgage customers, which has prompted a controversial debate. Will further base rate reductions lead to increased profitability for the banking sector or will they benefit the consumer and business arena?

While it would seem inevitable that a further reduction in rates should free up cheaper capital this does not appear to be the case at the moment as the current stance of the banks remains firm. It will literally play into the hands of the UK banking system and allow companies to expand their profit margins and take on extra finance at minimal cost. With many in the UK on the verge of serious financial difficulties and businesses dropping like flies there is a need for more and more cost savings to be passed to customers as soon as possible.

How the UK government would force UK banks to do more remains to be seen.

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