There has been a mixed reaction to the claims of a founding member of the Bank of England's Monetary Policy Committee who said that interest rates may have to be slashed to zero if Britain is to avoid a full-blown depression.

Charles Goodhart, who is regarded as one of the country's leading economists, was a member of the MPC for three years up until 2000. During an interview with Channel 4's Dispatches programme, he said:

“Interest rates will go down from now, by how far and how fast nobody knows.

“They could go to zero. They went to zero in Japan in the 1990s when the Japanese had a recession or depression which went on for a long time and was quite severe.”

Those representing the interests of savers have branded the 0% prediction outrageous as it would see people with money sitting in accounts rushing to withdraw their cash. They would then reinvest it overseas in countries offering better rates.

But Michael Baxter, an economist for financial information firm Defaqto, recently pointed out on the Mortgage for Business website that rates are now at one per cent in the US and the UK could be set to follow its lead.

He said: “There has got to be a very good chance that they [Britain’s interest rates] will fall to zero. I think there are a lot of parallels between the UK and US economy.”
Mortgage for Business believes such a drop in the base rate could be positive news for those with buy to let mortgages as it would make the cost of borrowing cheaper.

• The trade body Safe Home Income Plans (Ship) is urging Trading Standards to take a stronger stance against sale and lease back landlords who use erroneous advertising to mislead or confuse potential customers.

There have been several recent studies and reports into the sale and lease back sector which has attracted some unscrupulous operators taking advantage of the recent economic downturn and property slump.

As a result the Office of Fair Trading recommended that the sector should be overseen by the FSA.

Sip is particularly concerned by websites that to not cover all the risks that can arise from a sale and leaseback agreement.

The trade body wants Trading Standards to fine landlords who do not give precise information.