Skip to content
Join us

Long Term Planning Call from North East Business


The North East Shadow Monetary Policy Committee (MPC) was close to unanimity this week, as members voted broadly for interest rates to be held, but with some discussion over the desire for an increase.

The North East Shadow Monetary Policy Committee (MPC) was close to unanimity this week, as members voted broadly for interest rates to be held, but with some discussion over the desire for an increase.

A partnership between the North East Chamber of Commerce (NECC), Tees Valley-based accountancy firm Waltons Clark Whitehill 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.

Heather O'Driscoll, chair of the committee and Managing Partner at Waltons Clark Whitehill, said interest rates should be held in anticipation of the arrival of the new Governor of the Bank of England and the implementation of the MPC's new remit, announced in the Budget, allowing it to give forward predictions.

She said:

"It would be good to see the MPC give its plans for the coming six months, whether that involves increasing or decreasing the rate of interest. This would give some stability to businesses which are discouraged from borrowing because of continued uncertainty over the economy. People are waiting to see what the new Governor has to say and whether that will change thinking."

Ross Smith, Director of Policy at the North East Chamber of Commerce, called for a continued hold in the rate of interest.

He said:

"The Bank of England MPC now has the ability to give forward predictions which gives more certainty to business.

"Growth is still sluggish, but this new remit from the Chancellor probably allows businesses to plan for the months ahead."

John Elliott, Chairman of Ebac, provided the starkest contrast to calls for a hold in rates, but conceded they should not be changed on a whim.

He said:

"I've always felt that an economy can't be managed by playing around with interest rates.

"We need the Government to come up with a real and practical industrial policy. Interest rates should be about 5% because anyone borrowing should be prepared to pay this and savers should be properly paid."

Tony Slimmings, Director at Tees Valley-based WR Financial, provided an optimistic view, expressing his belief that the economy is heading in the right direction.

Mr. Slimmings said:

"As a financial services firm, we get a good picture of the state of the economy, as we know when clients are investing in staff and staff benefits, such as pensions. I would certainly say there are positive signs of growth with many of our clients and the picture is rosier than this time last year."

David Bowles, a non-executive director of NDI Ltd and Chairman of Inova Power, agreed on interest rates, and said:

"I think it provides confidence for industry. It helps to stabilise pricing for businesses, which probably makes them more attractive in their market place."

Graham Robb, Senior Partner at Darlington-based Recognition PR also indicated a desire for consistency in rates, even if they weren't to be held.

He said:

 "I want to see interest rates either go up 0.25% or stay where they are. I would hope other members agree that whatever it is, we should maintain it for the rest of the year."

The desire for a minor increase in the base rate was also expressed by Michael O'Connell, Managing Director of EOS, who commented:

"I think it is going to stop at 0.5% regardless. However, I would like to see it go up by at least 0.25%."

Kevin Rowan, Regional Secretary of the Northern TUC believes the economy's instability requires the hold in rates to be maintained.

He said:

"There shouldn't be any change right now, it's all a bit fragile at the moment."

This concern was echoed by Jim Willens, Chief Executive of Newcastle Building Society, who said:

"There is a mixed bag of economic indicators in the UK and Europe and we're still on a road that has potential bumps along the way – we need to manage our way through that.

Andrew Sugden, Head of External Engagement at Northumbria University said:

"It's still a hold for me. The UK economy is still so fragile and one thing clear in the Budget is how modest growth is."

Mr. Sugden also stated his desire to avoid further Quantitative Easing, commenting:

"The obvious requirement for greater liquidity to support the construction and housing sectors has in part been addressed through the announcements in last Wednesday's budget."

Ajay Jagota, Chief Executive of South Shields letting firm KIS, was also in support of avoiding further QE, commenting:

"I was partly pleased when Vince Cable made some mutterings regarding forcing banks to lend and charging a higher interest rate in order to indirectly force them to lend.

"That would have been a good strategy. More QE is just going to be on their balance sheet. Holding more money is only going to play into their hands."