Official interest rates have fallen from 5.75% to 5.5% amid fears over the UK economy and many predict there could be further rate cuts in the coming months.

David Bunker, area manager for print finance house Close Print Finance, told printweek.com this would have a "positive effect" on the print industry.

"Most print businesses are highly geared with a lot of debt so this is good news," Bunker said. "The cost of borrowing goes down, whether for capital equipment, overdrafts, bank loans or invoice discounting."

He said the rate cut would make it cheaper for printers to borrow money to buy equipment since most deals were via a fixed-interest loan. However, it would not necessarily make it easier for printers to get finance for equipment purchases because of the ongoing credit squeeze in the wake of the sub-prime crisis in the US and the troubles at UK bank Northern Rock.

However, Simon France, head of sales for print at HSBC, said retail loan rates would not drop immediately because the banks had already factored in the predicted rate fall and anticipated cuts in the New Year.

He added that printers would benefit from the boost to the wider economy and anyone with debt on variable-rate terms – such as a mortgage on freehold property or an overdraft – would feel the benefits immediately.

Bunker added that in terms of a decision on when to buy equipment, some printers might wait for predicted further rate cuts in the New Year, and also for Drupa, which runs over May to June in Düsseldorf, Germany, next year.

The print industry differs from the main UK economy in that it faces a problem of overcapacity, which drives prices down artificially, rather than under-capacity. Bunker said the rate rise would not have much effect on this, but as poorly run companies went out of business, the industry could be set for a price correction.

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