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North-East Shadow MPC members vote to hold interest rates
8:00am Wednesday 5th September 2012 in Business
The North East Shadow Monetary Policy Committee (MPC) has delivered a majority decision to maintain the current interest rate, ahead of the Bank of England’s own MPC announcement on Thursday.
A partnership between the North East Chamber of Commerce (NECC), the Institute of Chartered Accountants England and Wales (ICAEW) and The Northern Echo, 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.
A majority of eight to one to hold the rates was mirrored in the vote against further quantitative easing, with Ebac Group chairman John Elliott the contrary voter in both counts.
Having voted for a rise in the interest rate to 5%, Mr Elliott advocated further QE, saying: “It will cause inflation, which will in turn devalue our national debt, so yes, I think there should be further QE, but for the wrong reasons.”
Ross Smith, policy director for the NECC said: “In our automotive, offshore and aerospace industries, the North East has some of the best performing bits of the economy. But many firms have battled through a difficult summer as the Eurozone crisis continues to bite.
“Businesses are working tremendously hard to create the growth this region needs, but in difficult trading conditions, they need to be supported. In this context, it would be a big mistake to raise interest rates at the moment. But we need to give recent announcements about support for lending time to take effect before considering whether more quantitative easing is required.”
Tony Slimmings, of Stockton-based WR Financial, said increased regulation was causing significant problems for the financial services sector: “The whole industry is going to be decimated and the people who want financial advice are going to struggle to find good advice at a price they can afford.”
Anne Elliott, Partner at Latimer Hinks Solicitors, in Darlington, said deregulation in the legal system, with the new alternative business structure allowing companies outside of the sector to offer legal advice, was causing law firms to reinvent themselves and focus upon their greatest strengths. However, she added that banks were not helping the economy by continuing to sit on funds.
She said: “The banks say they have money to lend, but are still insisting on massive security before they lend.”
Ajay Jagota, of South Shields lettings firm KIS, said movement in his firm’s market was being affected by economic uncertainty among individuals. He said: “People are staying put because they have no confidence.”
A brighter note was offered by David Coates, Managing Director of The Northern Echo’s owner, Newsquest North East. He said: “We do see a very bright future now and something that hasn’t really come out yet is the potential for the online side of our business. Five years ago, I was encouraged by what was happening online, but we are now starting to see the benefits delivered.”