North-East Shadow MPC members narrowly vote to hold interest rates

The MPC is a partnership between The Northern Echo, the North East England Chamber of Commerce 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.

Graham Robb, senior partner at Recognition PR, said: “My instinct, though it might seem counter-intuitive to the narrative in the newspapers, is that the Bank of England should increase interest rates this time because it might give certainty to people who are buying a home or investing in a business property that that’s the rate they are going to pay. And also, should we have difficulties down the line then at least there is something we can do about it at the moment rates are so low that if you chop them a bit it doesn’t really do much. With low unemployment, with wages and staff recruitment issues and with everyone saying the economy is going well if we can’t look at the positive side and put up interest rates now when can we. I don’t think it’s a time for timidity by the Monetary Policy Committee.”

Gary Ellis, partner at Clive Owen LLP, said: “I did read an article recently along similar lines to Graham’s view but they actually said the time was passed for that and we missed the opportunity to increase rates. They felt that with the economic data if we were going to have an increase it should have already happened and perhaps this isn’t the time to do it.”

Chair of the committee and finance director at Darlington Building Society, Christopher White said: “I think that we have had missed opportunities at the end of 2017 when there were opportunities to increase rates and looking back I think that was an error and they should have gone up at that point. There is some good economic news out there, we’re not in a 1980’s boom scenario but are we ever going to be with the uncertainty that we have predominately led out of Brexit and I feel that the MPC has to be a little braver and to be used to the idea that not everything is going to be a positive number before you increase, there’s always going to be some risk.”

Chris McDonald, CEO of the Materials Processing Institute, said: “I’ve sat here at a number of meetings arguing for a hold or a cut because of my concerns about business investment but I am now of the view that further holds aren’t going to be the thing that tips business over the edge so for the credibility of the Bank of England we need to return to the position where the Bank does at least have tools at its disposal and if we don’t start making some steps in that direction we could have a crisis in the future and find that the Bank has run out of options. I now would favour a rise, I think we’ve put this off for too long now.”

James Robson, chairman of the Entrepreneurs’ Forum, said: “I support that view too. I was at a big show and the way the financing of capital equipment is financed has changed considerably. They’re offering finance on the basis that if you see a downturn in your cycles, just stop paying the monthly rent and we’ll take the machines away. That’s what boardrooms in manufacture and process are concerned about, they make these very chunky capital investments to improve productivity, but then sales fall away in a year’s time and competitors from the East or outside the EU come in and cut their prices”.

David Coates, managing director of Newsquest North East said: “We still have this artificial bond market where there’s so much Government money gone into propping up the bond market that bond yields are ridiculously low still. That hasn’t cycled through the system yet so I guess there will be a certain degree of nervousness amongst the MPC members about increasing interest rates because of the potential ramifications for bond yields because once that starts to move it could move very rapidly and capital values of bonds will come down and that could be back to 2007 in reverse.”

Rachel Anderson, head of policy and representation at the North East England Chamber of Commerce, said: “I think there’s probably a case in two or three months for a rise but I think at the moment it’s a hold, largely because of the wage pressures and differentials companies are facing and they’re going to face increased pressure if rates go up.”

Nick Pope, financial director, Godfrey Syrett, said: “Up until four or five weeks ago I would have come here and said definitely put rates up but I think the GDP results and with inflation coming down it’s at the point where you need to see the next quarters GDP to see if it was a blip so I’m not sure what is to be gained by a rate rise at the present time.”

Catriona Lingwood, Chief Executive at Constructing Excellence in the North East, said: “Activity in the construction market has dropped off over the last few months. We had the Beast from the East that caused lots of problems at the end of February beginning of March. House building is growing dramatically with the Government strategy to get more houses built and get people into the market. The commercial and civil side has grown marginally but it hasn’t made a significant difference so it’s been down to the housing side to keep the construction market buoyant.”

Nicola Neilson of Latimer Hinks Solicitors said: “The commercial property side of our work seems to have slowed down. We’re not seeing too many purchases coming through and that could be linked to a reluctance to borrow. The agricultural side has been very heavily hit by the Beast for the East and the deluge of rain and I don’t think buying and selling property is a priority, they have more pressing needs at the moment. On the residential side the new build market is thriving, less so on the more established houses which hasn’t picked up as it usually does in spring.”