Clive Owen LLP

The North East Shadow MPC was split this month between those advocating a small rise and those voting for the status quo. Concerns over inflation were the driver behind the decision to go for a 0.25% rise but the potential affects of an increase preyed on the minds of other members.

The MPC is a partnership between The Northern Echo, Clive Owen LLP and Recognition PR, 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 interest rate.

Tim Bailey, partner at Xsite Architecture said: “My vote would be to hold the rate. The pace of economic improvement in different sectors is very variable and an upward or downward shift would have adverse impacts somewhere. Construction contract starts have slowed while earlier project commissions remain steady. The widely held view is that the sector is quite vulnerable to borrowing cost fluctuation and doesn’t expect to be showing signs of recovering until Q2 next year.”

David Coates MD Newsquest LOCALiQ North said: “It appears that peak inflation has been reached and therefore I would vote to hold rates rather than increase them.

“I am still concerned that the full effect of the rapid increase in interest rates is yet to be felt in the housing market but there is growing evidence of a significant cooling there. If the cooling in the housing market leads to a significant reduction in transactions and deflation in that sector, the wider economy will be impacted. So, steady as we go for the time being and my vote would be to hold rates at the present level.”

Paul Gibson, partner at Active Financial Planners said: “My vote would be for a 0.25% rise. The worst thing would be to take the pressure off too early and then inflation comes back. There are plenty of cuts available if inflation falls below target so a 0.25% rise would be the most pragmatic choice.”

Nicola Bellerby, partner at Clive Owen LLP said: “With pressure on salaries resulting in pay rises due to inflation and the costs of borrowing increasing we are reaching a point at which businesses are wanting to see an end to raising interest rates. However, inflation remains high and I can see that there will be another 0.25% rise in the rate this week.”

Martyn Pullin, partner FRP Advisory said: “My vote at present would be for a further rise. We can get complacent when we see the inflation rate falling but with a target rate of 2%, 6.8% is still just not good enough, we have seen inflation in the US fall at a far faster rate.

“From my client data, there has been a significant cooling in discretionary spending which is impacting retailers and anyone involved in home improvement. Against this we have seen OPEC move reduce production to support oil prices and the ECB impose their 10^th consecutive .25pc rise. Whilst prices have risen over 17% in the UK over the past 2 years it does feel as this is abating, and I would expect inflation to once again fall. Inflation does however remain stubbornly high and I don’t feel we can be out of step with our near neighbours, as such, I am voting for another .25pc rise in the hope this will be the last.”

Graham Robb, senior partner at Recognition PR said: “It is time for the Bank of England to hold its nerve at the rate it has set. It should pause, reflect and give the rate time to work.”