CBI's Barker said however that she believed the U.S. situation would worsen and that a UK rate cut would prove necessary. Martin Weale, Director of the National Institute Economic and Social Research said Chancellor of the Exchequer Gordon Brown should have lowered the Bank of England's inflation target to 2.0 pct from 2.5 pct in the budget.
"Had the Chancellor taken the opportunity to reduce the inflation target and to tighten the fiscal target slightly in the meantime, we would have lower interest rates," he said.
Weale said Brown would have lowered the inflation target if he wanted the UK economy to achieve convergence with the euro zone.