MEMBERS of the North-East Shadow Monetary Policy Committee (MPC) reluctantly voted to keep interest rates on hold with the emphasis being on the need for a stable business environment in the wake of the General Election.

The MPC is a partnership between The Northern Echo, the North East England Chamber of Commerce (NEECC) and Darlington Building Society, which considers the state of 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.

It was a unanimous decision to keep the interest rate at its current level with the meeting mainly focusing on overcoming uncertainty and bringing in stability in the current political climate.

One member, Ajay Jagota, thought it was inevitable that another General Election would have to be called within in six to 12 months.

Chairman of the committee and finance director at Darlington Building Society, Christopher White, said: “There really is an extraordinary amount of uncertainty there for businesses.

“We talked at the top of the meeting around the fact that clearly one of the impacts is that firms will inevitably start to look at investment decisions and whether or not they will delay those or cancel them altogether in these times of uncertainty.”

Ross Smith, NEECC director of policy, said: “Given the number of uncertainties there are in the external environment for business at the moment, they don’t need the surprise of another one.

“I think the Bank of England needs to consider going back to that policy of forward guidance which they had earlier and try and give some clear indication as to when that increase is likely to come around, because clearly if inflation concerns remain as high as they are that is going to get higher on the agenda.”

David Coates, managing director of Newsquest Yorkshire and North-East, which publishes The Northern Echo, said: “From a business perspective, being in the advertising market, advertising is incredibly sensitive to uncertainty.

"We live in uncertain times.

"Thankfully, our business has managed to navigate its way through the challenges that have been thrown up in the last weeks and months.”

Jonathan Willett, a director at Henderson Insurance Brokers’ Teesside office, said: “I was actually with one client that was looking to make a large investment in euros in terms of some plant and machinery and has put that on hold for the time being depending on the outcome of what happens in the next few weeks.

“There are some areas that will continue to grow, but there is a lot of uncertainty.”

Tim Bailey, a board member of Constructing Excellence in the North-East, said: “The overall picture, given where we are politically, has got to be that there is no more change in any other data sets.

"Therefore interest rates should stay on hold because a change either way would build in a whole new bunch of other thinking that at the moment, I don’t think, the (construction) industry would welcome.”

Graham Robb, senior partner at Recognition PR, said: “As a result of the election people are uncertain and uncertainty is damaging.

"Business likes stability and hopefully by the end of this week we will get this, and that stability will give people the confidence to invest.”

Chris McDonald, chief executive of the Materials Processing Institute, based near Middlesbrough, said: “In ordinary circumstance we would be voting for an increase, but that’s not where I am at the moment, given the general industrial indicators and what they suggest about the strength of this part of industry.”

Ajay Jagota, chief executive of KIS Group, said: “In a coalition or any arrangement that we end up with I don’t think there’s going to be anything new that’s going to be able to get through Parliament so therefore I would probably say in the next six to 12 months it would be better for the country for politicians to go back to the electorate with a new manifesto.”

Paul Gibson, director and chartered financial planner (Fellow), of Active Independent Financial Planners, said: “People are not going to see the rates of return they have seen over recent years and it’s trying to reset that benchmark and set expectations lower.

"I was similar to some people in the room I was certainly looking for an interest rate rise, small measured rates, but now with the uncertainty I do believe it is time to leave it as it is.”