BUSINESS chiefs have welcomed cheaper borrowing but warned that the quarter per cent base rate cut was not enough to ward off a possible recession.

Some had been looking for a more courageous half per cent cut by the Bank of England Monetary Policy Committee.

But the bank decided on a more cautious approach to the worsening economic situation, with falling property prices and a squeeze on consumer spending in the wake of the credit crunch.

Mike Sargeant, managing director of Canterbury-based Pharon Independent Financial Advisers, said it was the right decision to cut the rate, but more was needed.

He expected a further quarter per cent reduction in February.

"I think it was expected but it was not enough," he said. "We need to see more in the New Year and the expectation is that they will reduce the rate by a quarter per cent in February and we will be looking for a another cut after that."

The latest cut was "only acknowledging that the market is struggling. We’ve seen declines in the housing market and that’s going to concern consumers because increasing property values made them feel comfortable and I think you’ll see a slowdown in the economy. That’s a worry for local businesses."

He would not rule out the possibility of a recession. "I know the Government will be doing everything they can to avoid it but the definition of a recession is two consecutive months when gross domestic product (GDP) falls and I wouldn’t be at all surprised if we saw that."

Jo James, of Kent Invicta Chamber of Commerce, said there had been an economic slowdown in the county but so far it had not been catastrophic.

"What is important is to try and maintain the economic stability we have enjoyed in recent years, and not suffer any major down-turns," she said. " I think business in Kent has been waiting to see what the Bank would do. This cut should help to give companies the incentive to continue confident trading."