My question is, will the cut in interest rates encourage people to spend as intended? For me personally it makes no difference whatsoever. http://www.bbc.com/news/business-36976528
It would appear that the state owned banks are not going to pass on this rate cut to its customers. I cant see that a 1/4 percent cut will influence many people to go spend more, not within these uncertain times.
Anyone that thinks that a rate cut makes no difference isn't investing in the right product or paying enough attention to their mortgage payment or retirement fund. Take a look at the prices of UK 10Y Gilt futures over the past 3 months. The primary intention of any rate cut is not to impacts savings and hence encourage withdrawal (since that just results in hoarding of real cash or alternative investment) the real impact is that it makes borrowing cheaper, reducing interest burden and hence freeing up cash for investment or expenditure. Very low to zero or even negative interest rates are nothing new. Switzerland, Denmark and Sweden are all experiencing negative interest rates, as is Japan. The US Fed funds target range is also in the 0.25% to 0.5% range. Some UK account holders are effectively already paying negative interest rates because they are being charged a monthly fee for banking which outstrips any interest that may be paid into their accounts.
Not having a retirement fund = fortunate? Whatever form of investment you have for your retirement is fundamentally affected.