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Businesses want Bank Of England to consider North-South divide
5:21pm Tuesday 3rd December 2013 in Business
THE North East Shadow Monetary Policy Committee (MPC) continues to call for interest rates to be held at 0.5 per cent, but members have warned that the Bank of England needs to consider regional differences when deciding upon policies.
A partnership between The Northern Echo, Hartlepool-based chartered accountants and business advisers Waltons Clark Whitehill and the North East Chamber of Commerce (NECC), the North East Shadow MPC looks at the region’s economy and gives experts from a variety of sectors the opportunity to argue their case for a shift, or hold, in the rate.
As well as voting 8-1 in favour of a hold in interest rates, the Shadow MPC were unanimous in their belief that there should be no further Quantitative Easing.
Nigel Mills, Chairman of the Entrepreneurs’ Forum, said: “The Bank of England appear to be looking at different types of stimulus for different areas of the economy and I hope they look at what the North East needs. I hope they realise there is an economy outside of the M25 and we all need different measures.”
Andrew Sugden, Head of External Relations at Northumbria University said:
"I don’t think there is a bigger macroeconomic issue for the North-East than employment. If we are looking for a decision for the North-East economy in this particular forum, it’s very difficult to look at a rise in interest rates which could potentially have a negative effect on employment.”
Graham Robb, Senior Partner at Recognition Marketing and PR, described the Bank of England’s seven per cent target for unemployment prior to consideration of interest rate changes as “entirely arbitrary and a fantasy for the North-East”.
Members were very positive about the construction sector in particular.
Derek Boyd, a Partner at Waltons Clark Whitehill, said: “These last five years have been tricky. However, over the last six months or so, conversations with some clients who are particularly in the construction industry have shown them to be much more happy with their lot, because they seem to have order books which are filling up. I think the long term turnaround in the construction industry is finally happening.”
Catriona Lingwood, Chief Executive of Constructing Excellence in the North East, agreed. She said: “Confidence has been great for the last six months now and we are looking forward to 2014. I think it’s going to be much better.”
The improvements in the construction sector had seen an end to “suicidal bidding”, said Catriona. “Contractors were bidding under cost and that’s not sustainable.”
Anne Elliott, Partner at Latimer Hinks Solicitors, said: “Commercial property and the residential property markets have gone into overdrive. It’s quite astounding to see. Our property lawyers are extremely busy.”
Nigel Mills was keen to point to the consumers’ position in the economy and said the relationship between wages and inflation was having a major effect on services and retail. He said: “The consumer demands more and the retailers and service providers are giving more. If wages don’t keep up with inflation then consumers are going to demand even more for their money.”
However, with the Scottish independence vote, the General Election and uncertainty over the long term position of the UK in Europe, he said: “The recovery is very fragile, there are storm clouds on the horizon, but there are opportunities if you can grab them.”
Ross Smith, Director of Policy at the North East Chamber of Commerce said “There’s been a lot of good news in the North East economy over the past year that seems to be continuing from a variety of sectors. People are seeing order books strengthen, more confidence to invest, more confidence to take on new staff, but there are still a number of uncertainties there on the horizon.”
Ajay Jagota, Chief Executive of KIS Group, said the improvements in construction had a direct effect on housing, and in turn on the consumer. He welcomed the Government’s decision to bring the Help to Buy scheme forward, adding: “The only way to help the consumer is through housing. That’s going to boost people’s confidence, house prices moving up for consumers, giving them confidence to go out and spend their money.”
Andrew Sugden said the region’s universities were seeing increased student numbers. He said: “All of the North East’s universities have done very well, at Northumbria we are very pleased with the recruitment rate.”
He added that engagement with businesses wanting research was also on the rise, commenting that these were signs of long term investment.
Jane Reynolds, Tees Valley Business Manager at North East Finance, said: “There was a time when people were maybe moving away from networking and seeing membership of organisations as an expense, but now they are out there, wanting to do business.”
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