THE North East Shadow Monetary Policy Committee (MPC) has voted overwhelmingly 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) 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.
While the committee voted 8-1 in favour of no change to interest rates, there were indications that the lone advocate for a rise, John Elliott, outspoken chairman of the Ebac Group, may soon have support from elsewhere within the committee.
Nigel Mills, Managing Director of property investors Closewalk Ltd and Chairman of the Entrepreneurs Forum in the North East, said: “The decision today should very much have a caveat in that we expect the rate to go up in the medium to long term. The new Governor of the Bank of England, I think will set a stricter agenda and a more demanding agenda than simply ‘let’s leave things as they are’.”
Keith Proudfoot, Northern Regional Director, Institute of Chartered Accountants England and Wales, who chaired the meeting, said: “There has been some positive news on jobs, but that has come to an end. That seems to have finished now, businesses have the staff they need. Things are tough and are going to get tougher.”
The strongest positive message came from Mr Elliott who told how his company was busy developing new products and had received Regional Growth Fund money for the manufacture of domestic appliances, including washing machines. Additionally, he said: “We have had a wet summer, and we make dehumidifiers, and we also saw our dehumidifiers given a ‘best buy’ award, when pitched against a number of competitors, which has boosted sales.”
Mark Stephenson, Policy Advisor at the North East Chamber of Commerce, said: “Anecdotally, confidence does seem to be improving, but that doesn’t seem to be manifesting with changes to workforces or plant etc.”
Jim Willens, Chief Executive of Newcastle Building Society, said there were problems with inflation being out of balance with interest rates, but added: “There are moves to suggest that it will improve, but my view is that it will be gradual.”
He added: “We have seen a very good year in the North East in the Building Society sector. That market is beginning to become more competitive, with prices coming down.”
Mr Mills added: “If you are positive about the business that you have, then the possibilities for growth are huge, because everybody has got their heads down.”
David Bowles, Chairman of Inova Power Ltd and Non-Executive Director of NDI Ltd, said the space technology and aerospace markets were “booming”. He said: “The supply chain for UK-based satellite manufacturers is encroaching into all parts of the UK, including the North East.”
He added: “You just can’t get enough aeroplanes to meet the orders.”
Neil Foster, from the Northern TUC added: “At the moment, we have seven job seekers per vacancy in the region. In sectors such as retail, some places are reporting over 100 applicants per vacancy.”
However, he said: “We have got a lot of job seekers, and they don’t have enough skills and they are all fighting for not enough jobs.”
Andrew Sugden, Head of External Engagement at Northumbria University, said the education system was seeing a greater interest in courses with strong career paths. He said: “We are seeing much more of an interest from parents and young people in what the job opportunities for the courses are.”
Catriona Lingwood, Chief Executive of Constructing Excellence in the North East, said there was a “huge downturn” in construction, of more than 14 per cent in the last year.
She said: “Infrastructure has improved, although they were in dire straits, and housing has improved. Repair and maintenance has had another fall this quarter. The further away from London, the worse it gets.”