Oxfordshire businesses reacted cautiously to the decision by the Bank of England to cut interest rates by a quarter of a point to 5.25 per cent.

Barry Wheatley, chairman of the Federation of Small Businesses in Oxfordshire, who runs Internet company Bobex in Witney, said: "I'm not sure that businesses will see any effect.

"It's more a matter of the Bank of England sending out a signal. Some of the banks and building societies won't pass on the rate cut. We have to wait and see how the pressures of inflation work through the economy."

David Wilsdon, of Green Accountancy, based in Farmoor, said: "We expected a cut. Many small businesses are noticing a slowdown in economic activity. Businesses were looking for a rate cut, but there are also inflationary pressures. We are looking at managing a slowdown, rather than a boost to the economy.

He added: "Businesses are going to face tougher trading conditions. Those that survive will need to be forward looking and think about environmental issues, as their customers are."

Chris Coates, managing director of Galliford Try Homes, which is building new homes in Banbury and Marcham, said: "I now hope to see lenders passing on the cut to homeowners, easing the path for both first-time buyers and those coming to the end of fixed-rate deals.

"While we have experienced a continued interest from new homebuyers since the start of the year, yesterday's decision will instil further confidence in the market.

"A second rate cut, taking rates down to five per cent, along with sensible lending should ensure a steady market for 2008, with the UK avoiding much of the turmoil currently experienced in the US."

David Lushington, of Oxford-based TaxAssist Accountants, said: "There are winners and losers. For the retail sector it's good news, although they would have liked a bigger cut.

"For manufacturing, it will tend to weaken the pound, which will make it more expensive to import raw materials. On the other hand, it may help exporters.

"Overall, I think it was needed. I think the bank was sufficiently cautious - you wouldn't want to increase inflation."

12:10pm Friday 8th February 2008

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