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Interest rate 'will be cut'

The Bank of England will reduce the base rate of interest to 3.25 percent by the end of next year.According to Howard Archer, chief economist at Global Insight, the cuts will come as the bank attempts to stimulate economic growth.This is because reducing interest rates generally makes loan repayments cheaper - and, therefore, encouraging consumers to spend more on goods and services.Currently, the bank rate stands at five per cent.Mr Archer said: "I think the rates will come down to 3.25 per cent next year and I wouldn't rule out a further cut before the end of the year. "I think rates could well be down to 4.5 per cent by the end of this year and then down to 3.25 per cent next year."Figures from the office of national statistics show that GDP growth for the UK stood at zero for the last three months.France and Ireland are already in recession - meaning that they have suffered six straight months of negative growth.

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