IN light of the political uncertainty surrounding the General Election, the North East Shadow Monetary Policy Committee (MPC) has cautiously voted to hold interest rates.

The MPC, which unanimously voted eight-nil in favour of a hold, saw no reason to change the base rate of 0.5 per cent as members voiced concerns about the upcoming election, the low rate of inflation, and problems in the eurozone.

Members also were against any further Quantitative Easing (QE).

A partnership between The Northern Echo, the North East Chamber of Commerce (NECC), and V and A Vigar and Co (Darlington) LLP, 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.

Amanda Vigar, managing partner at V and A Vigar and Co, and chairwoman of the committee, started off the voting in favour of a hold.

She said: “To raise interest rates this close to the General Election would be ridiculous.

"There is enough political uncertainty going around, not to mention the uncertainty in the eurozone, and a rise would only impact on businesses, particularly small and medium-sized companies, which benefit the economy massively.

"GDP growth was faster than originally thought for 2014 in the UK, so we need to build on this positivity and avoid going back to square one.”

Ross Smith, NECC director of policy, believes a rise would affect the foreign exchange, which would impact heavily on its members and the region’s exporters.

He said: “One of the biggest concerns for our members is the foreign exchange rate and, in particular, the strength of the pound.

"A rise in interest rates would only exasperate the market and with inflation at such a low level, there is no need to raise the base rate to the detriment of business.”

Rachel Turnbull, chief executive of TT2 Limited, sees the uncertainty surrounding the General Election as enough reason to hold interest rates.

She said: “With such economic and political uncertainty, with the General Election just over a month away, it would be wise to hold interest rates.

"Inflation still remains low, which is benefiting consumers, and hopefully this can help drive the economy forward until we’re eventually in a position to normalise the base rate.”

Nigel Mills, chairman of the Entrepreneurs’ Forum, agreed, saying he feels the economy, despite its growth, is still weak.

He said: “Although the economy is growing, it is still fragile and coupled with the uncertainty surrounding the General Election, this is enough reason for interest rates to be held.”

Jim Willens, chief executive of Newcastle Building Society, believes the housing market is progressing well with no fears on the horizon, so the rate should be held to drive this positivity.

Mr Willens said: “Things are progressing steadily on the house purchasing front with no signs of the market overheating or grinding to halt.

"We need to maintain this positive outlook before an eventual rise and with the General Election coming up and the political uncertainty it brings, it would be in everyone’s best interests to maintain interest rates.”

Hirohito Imakoji, managing director at Liebherr-Sunderland Works Ltd, also feels interest rates should be held, amid discontent in the eurozone and the effect a change would have on the foreign exchange.

He said: “Although the economy is doing reasonably well, there are still risks lurking in Europe and the strength of the pound to the euro is worrying, not to mention the current low rate of inflation.

"Therefore, it would be best to reserve any action for when it is necessary.”

Mark Marsh, finance director at Seaward Group, also called for a hold to the interest rate, with no further stimulus to the economy through QE.

Jane Reynolds, Tees Valley Business Manager at North East Finance, rounded off the voting in favour of hold, which would benefit small and medium-sized companies.

She added: “The current low interest rate is positive for business, especially small and medium-sized firms, which reflects in the prices for goods and services and this, in turn, makes the financing of operations less expensive and more economically viable.”