The Forum of Private Business (FPB) has welcomed the Bank of England's decision to cut interest rates and believes it will benefit small businesses.

The Bank of England, in conjunction with five other central banks, yesterday cut interest rates by half a point from 5% to 4.5%.

The FPB stated that reducing the cost of borrowing would boost the confidence of small businesses, many of which have been hit hard by rising costs and overheads.

"Cutting interest rates will have been a difficult decision to make, but the FPB believes it is the correct one," said Nick Palin, director of finance at the FPB.

"With many analysts predicting that the UK is already in a recession, or very close to one, this decision should boost the market and hopefully inject some confidence in to it."