FRESH from the General Election result, business leaders in the North-East have voted unanimously in favour of holding interest rates.

The North East Shadow MPC voted 10-0 to keep rates at 0.5 per cent, with members still cautious following the change in Government, as well as the UK dipping into deflation for the first time in 50 years, in April, and the possible impact a rise would have on the foreign exchange and exports.

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

A partnership between The Northern Echo, V and A Vigar and Co (Darlington) LLP and the North East Chamber of Commerce (NECC), 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 chairwoman of the committee, started off the voting in favour of a hold to allow for stability as the country adjusts to the newly-formed Government.

She said: “Interest rates still need to be held to allow for further economic growth and stability.

"The new Conservative Government has only been in office a matter of weeks, so we need to allow time for the country to adjust as well as see how the upcoming Budget, amongst other things, will shape businesses and the country as a whole.”

Ross Smith, NECC director of policy, believes inflation is too low to warrant a rise and that any increase would impact on exports and the North East economy.

He said: “Inflation continues to remain low and has been non-existent, so there is no real pressure to raise interest rates and doing so would only damage exports, which are crucial to the UK economy and here in the North-East.”

Colin Fyfe, chief executive of Darlington Building Society, feels a rate rise is likely to happen in 2016 with the economy in a good position and signs of a recovery in the housing market.

He added: “Following the General Election, there is more stability and we are starting to see signs of an uplift in the housing market and increases in real wages.

"Although we are currently in a deflationary period, the rate of inflation should rise throughout the year and the first of quarter of 2016 will be the time when indicators will lean towards an interest rate rise.

"The country is currently at the start of that cycle, despite there being some potential risks on the horizon with the EU referendum and the possible impact this could have on business spending.”

Jonathan Willett, a director at Henderson Insurance Brokers Teesside office, believes interest rates need to be held until the economy is in a strong enough position.

He said: “With the economy still recovering and a new Government in place, interest rates should be held to bring some stability to the country.

"Businesses are benefiting from a rise in consumer confidence and we need this to continue to keep growing the economy, which will allow for a smooth transition until the time becomes right to raise the interest rate.”

Anne Elliott, chief executive at Latimer Hinks Solicitors, believes the new Government needs time to settle first and the time for action will be after the Budget.

She said: “Given the formation of a new Government, I don’t think there is any need to change interest rates. In my view, the new regime needs time to settle in and we first need to hear what is outlined in the next Budget, which will be free from the constraints of a coalition.”

Nigel Mills, chairman of the Entrepreneurs’ Forum, also in favour of a hold, still feels the economy is weak following the General Election.

He said: “The economy is still fragile, especially after the General Election, with uncertainty surrounding the economic outlook and growth in the UK, so interest rates need to be held.”

Beth Farhat, regional secretary for the Northern TUC, believes raising interest rates would damage the economic recovery and working families.

She said: “Raising interest rates now would choke off the recovery.

"While households are still trapped in the longest living standards squeeze for over a century, an increase in mortgage payments is the last thing they need.

"Rates cannot stay at such historic lows forever, but they should not increase until the recovery is sustained and workers start to see the proceeds in their pay packets.”

Hirohito Imakoji, managing director at Liebherr-Sunderland Works Ltd, believes a rise would impact heavily on the foreign exchange and economic growth.

He said: “Although there are some signs of recovery in the UK economy with a rise in real wages and employment, an increase in the interest rate has to happen slowly and in line with the recovery of the inflation towards the two per cent mark.

"I am worried an increase in the current rate would have an adverse effect on growth and the foreign exchange rate, so, in light of the most recent inflation data, an increase in the interest rate and a reduction of the asset purchase programme is currently not an option, in my opinion.”

Graham Robb, senior partner at Recognition PR, also feels interest rates should be held, but believes the time to consider a rise isn’t too far away.

He said: “The time is coming to seriously consider raising interest rates, but all the indicators suggest that they should remain low in the medium term.

"However, the economy can take a rise and this would allow investors and savers to benefit from realistic returns.”

Mark Marsh, finance director at Seaward Group, rounded off voting in favour of a hold, fearing a rise would have a negative impact on exchange rates, which would affect exports.

He added: “The euro to pound rate is still the most important factor for our business and a rise in interest rates before more positive data comes out of Europe would be detrimental.”