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The North-East Shadow MPC give vote of confidence to Mark Carney
NORTH-EAST business leaders have backed new Bank of England Governor Mark Carney’s policy of forward guidance on interest rates.
Members of the North-East Shadow Monetary Policy Committee (NEMPC) gave an eight to one vote of confidence in Mr Carney’s direction of the Bank’s own MPC, after he revealed interest rates would hold until unemployment drops below seven per cent.
A partnership between the North East Chamber of Commerce (NECC), Tees Valley-based accountancy firm Waltons Clark Whitehill and The Northern Echo, NEMPC 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.
Members also voted eight to one for a hold in interest rates at 0.5 per cent, and were against any additional quantitative easing.
The contrary opinion came from John Elliott, chairman of Newton Aycliffe-based dehumidifier maker Ebac, who has long argued that interest rates should be raised to between three per cent and five per cent, saying this is a fair level for both borrowers and savers.
Heather O’Driscoll, managing partner at Waltons Clark Whitehill, said there was a lot of positivity around the meeting and the business environment, but a change was still required in bank lending.
She said: “We have had our best year ever, but from talking to some of our clients, because they are smaller or medium sized businesses, the banks aren’t lending to them.
“It’s time the banks started helping little businesses, as well as the larger businesses, because they employ a lot of people.”
Mark Stephenson, NECC policy team leader, said: “The training side of the chamber is doing very well; people want to take on staff, in particular apprentices.
“Business seems to be good, it reflects what has been said around the table.”
Ajay Jagota, chief executive of Tyneside lettings agency KIS, said Government schemes had turned the market, with an increase in the number of people leaving rented accommodation to buying properties.
Of Mr Carney, he said: “He has given some security to the market. “What is the point of making a decision every month on whether interest rates are going to go up?
"It’s like me holding a meeting with my staff every month and saying ‘yes, you have got a job for another month’.”
Jim Willens, Newcastle Building Society chief executive agreed the Government schemes had played a part in improving the market, albeit indirectly.
He said: “There is more activity in the housing market than there was a year ago.
“The Government schemes, even if they aren’t producing numbers of people who are using the schemes, are having a positive effect through the word of mouth that has gone with them.”
Beth Farhat, Northern TUC regional secretary, said her main concern was the story behind employment figures, with such practices as zero hours contracts skewing statistics and proving unhealthy for many involved.
She said: “There is a massive increase in zero hour contracts, which is skewing employment figures.
“What we are actually seeing is unemployment going doing, but in reality if someone has five zero hour contracts, which we are seeing across the North-East and we have evidence to prove that is happening, it is massively skewing unemployment figures.”
Mr Elliott said employment could be improved, and the cost of unemployment significantly reduced, by creating jobs manufacturing the basic products consumed in the UK.
He said: “It makes sense to me that it would be better if people were employed making things like washing machines or clothing, rather than sitting at home.
“It’s got to be better for the economy.
“We think that buying a cheaper pair of jeans from China or Bangladesh is a good idea because of lower labour costs, but we are paying again for the people who are sat at home, unemployed, when they could be paid to make the jeans here.”
Anne Elliott, partner at Latimer Hinks solicitors, in Darlington, said there were large numbers of law graduates who were unable to find jobs in the current climate.
She said: “The jobs just aren’t out there.
“We have got a mass of law graduates that are qualified in everything but can’t get a contract.”
However, she said Latimer Hinks had taken steps to ensure its own position and had focused on the business in terms of doing what we are good at.
Graham Robb, senior partner at Recognition Marketing and PR, said: “As far as employment is concerned, I personally, in my small business, have employed another person in the last quarter and I have seen similar tentative steps forward in other companies.
“The clients that are selling to members of the public, a good example would be a motor dealership chain, have had a good lift.”
Catriona Lingwood, chief executive of Constructing Excellence in the North-East, said the positivity in the economy was reflected in the construction sector, highlighted by increased demand for such materials as bricks.
She said: “I think we have started to see a difference, it has started to make an impact. “This is a significant change to what there was before.”
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