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Committee member argues for rates rise
THE North East Shadow Monetary Policy Committee (MPC) has delivered a majority decision not to change the interest rate and hold further quantitative easing, ahead of the Bank of England's announcement on Thursday.
However, one member, Michael O'Connell, of precision engineering company EOS, believed that a ½ per cent hike in interest rates is necessary.
"The economy is better than has been indicated in the figures released by the government, not significantly better, but the green shoots are starting to appear with a bit of confidence coming back," he said. "We have seen an increase in enquiries coming in and there is more confidence in the market. The increase would be beneficial for future business."
There was general consensus among members is that further Quantitative Easing (QE) would not benefit the economy.
A partnership between the North East Chamber of Commerce, the Institute of Chartered Accountants England and Wales 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.
Ajay Jagota, of property firm KIS Group, said: "Base rates should remain unchanged. The housing sector is still yet to return to any normality and consumer confidence is still affecting businesses along with recent lack of growth reports. Further QE will no longer help with the circumstances and has failed to boost the economy."
"The underlying problems lie with an absence of growth and tailing off of tax revenues. In addition, a recent report by Morgan Stanley predicted that Britain is on course for a record deficit of 126 billion in 2013/14 equating to 7.8 per cent GDP, more cuts will ensue which will surely halter any imminent recovery."
Mr Jagota is one of three new members to have joined the committee this month, alongside Andrew Sugden of Northumbria University and Tony Slimmings of Stockton-based WR Financial.