TTHERE was no consensus at this month’s North East Shadow Monetary Policy Committee (MPC) meeting with members split between holding interest rates, a small rise and one member mooting a decrease in rates. There was a more gloomy outlook from most members than in recent months.

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.

David Coates, managing director of Newsquest North East, said: “I’d vote to hold rates. Given the uncertain political outlook, we need stability and I can see no good reason for a change at this time.”

Gary Ellis, partner at Clive Owen LLP, said: “My vote is for a “leave as it is” at the moment. Economic and political fragility leads to a finely balanced position at the moment - and therefore any interest rate increase should be delayed for a couple of months.”

Chris McDonald, CEO of the Materials Processing Institute, said: “I would vote to hold rates. Everything seems far too uncertain for a change, with manufacturers and retailers going to the wall and no clarity on Brexit.”

Chair of the committee and finance director at Darlington Building Society, Christopher White said: “I think the MPC should be considering a rate rise, even if it was a smaller rise of 10 basis points. The Governor of the Bank of England, Mark Carney, has stated that the MPC will increase rates if the economy continues to perform but I worry that if we wait too long, we will find ourselves looking back at mid-2019 as an opportunity missed.

“With good employment levels, inflation edging above target levels and Brexit kicked down the road now could be a good opportunity to start the journey to revert to more normal interest rate levels. With some global economies lowering their central bank rates and America warning it may have to do the same later in the year there may be less opportunity later in the year to increase rates.

“An increase in rates would also be good news for savers after a long period of lower returns.”

Rachel Anderson, Assistant Director – Policy (Tees Valley and Energy) North East England Chamber of Commerce, said: “My vote would be a hold. The economy is too uncertain at the moment and we have seen a slowing in manufacturing and sales in the 2nd quarter of the year as the effects of stockpiling in the first quarter work through.

“We are still in a period of great uncertainty and have seen a slowing in retail sales this quarter. Therefore, I don’t think it would be the time for the Bank of England to look at moving rates and it is better to wait until the next meeting when we will have better data on the impact of the Brexit delay past 29th March and before we hit the October deadline.

Paul Gibson, director and chartered financial planner at Active Chartered Financial Planners said: “Recent data has deteriorated so markets are expecting a 0.75% (yes 0.75%!) interest rate cut in the US over the course of this year. This is subject to change however, where the US goes, the UK usually follows.

“The dip in GDP published recently is expected to last for the whole quarter (so the bad news will keep coming all the way into August as its always out of date). Most believe it will be temporary, but the mood music is negative. Meanwhile Sterling remains weak at around $1.27 so any rate cuts could weaken it further, never mind Brexit.

“In my industry there are concerns starting to build about the state of the global economy and with the Brexit mood music hardening, we are not expecting interest rate rises in the near term as markets and jobs could start to be hit if we started tightening at this stage.

“My vote is not to change rates at this time.”

Chris Droogan, Managing Director of Cleveland Bridge, said: “Although UK economic growth is slipping back after Q1 temporary stock building, rising consumer confidence and wage growth would indicate that the UK is still on course to maintain 1% + annual growth.

“However, the failure to secure an EU exit deal acceptable to parliament, the change in government leadership plus deadlock in parliament will now lead to an extended, possibly very extended, period of uncertainty over the form and timing of Brexit. It seems inevitable that this extended uncertainty will be a source of economic weakness.

“In terms of Cleveland Bridge prospects, latest figures confirm that overall UK construction output has stagnated, but the overall trend of rising UK infrastructure output is still a positive factor. However, the latest quarterly release shows that the underlying level of infrastructure orders remains at its lowest point for 5 years.

“Although maintaining interest rate at its present level is an acceptable policy given continuing economic growth and the fact that current inflation is almost precisely at the 2% target level, the BOE should consider making a small temporary reduction in interest rate in order to signal that it will provide as much support as it can whilst UK political paralysis continues.”

Graham Robb, senior partner of Recognition PR, said: “Inflation is starting to be a concern. We can’t let Brexit cause us to be myopic to the dangers of inflation and now the time could be opportune for a rise in interest rates.”