Tesco boss Sir Terry Leahy 'pressured Bank to cut interest rates'

By Matthew Moore
Last Updated: 11:18AM GMT 08 Nov 2008

Sir Terry Leahy held private meetings with members of the Monetary Police Committee including Mervyn King, the Bank's governor, to urge them to take decisive action to boost consumer confidence.

Britain's retailers fear that crucial pre-Christmas trading will suffer as Britons tighten their wallets amid predictions of an imminent recession.

Sir Terry Leahy, who sits on Gordon Brown's committee of business leaders, is one of the most influential chief executives in Britain.

The Guardian newspaper reported that he discussed the country's economic plight at a breakfast meeting with Mr King on Threadneedle Street in the City, and also met MPC economist David Blanchflower who had been one of strongest advocates for steep rate cuts.

Tesco is the country's biggest supermarket, taking £1 of every £8 spent on the high street. It announced six-month profits of £1.44bn a month ago, up 11pc, but is facing stiff competition from cut-price retailers like Lidl and Aldo as the financial crisis hits consumers' wallets.

In September Sir Terry publicly called for lending rates to come down, saying: "Inflation has passed its peak ... and that will leave room for interest rate cuts which I think will be welcomed."

A Tesco spokesman refused to confirm or deny the reports of Sir Terry's meetings, but Lucy Neville-Rolfe, the supermarket's director of legal affairs, said: "The MPC did a very brave thing." She added: "Our concern is to make sure the banks pass the rate cut on."

Yesterday Halifax, Nationwide, Royal Bank of Scotland and NatWest, and Scottish Widows all said they would be reducing their standard variable rate by 1.5 per cent, in line with the Bank's shock reduction on Wednesday, which slashed the base rate to a 53 year low of 3 per cent.