Clive Owen LLP

Gloomy economic picture painted by Yorkshire Shadow MPC

A very gloomy Yorkshire Shadow MPC unanimously voted to hold interest rates this month, with very little positivity in members’ comments – inflation, supply chain issues, recruitment and wage pressures all featured.

The MPC is a partnership between Clive Owen LLP and the York Press, 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.

Rob Whitehead, of Clive Owen LLP, flagged up how businesses were suffering from inflationary pressures with supply chain costs, purchases and overheads all going up.

He said: “Whether now’s the time to be starting to increase interest rates, I am not 100 percent sure on that, although it would definitely send a signal to the market.”

Steve Lowe, of Newquest LOCALiQ, said: “We have to encourage people to continue to feel confident in spending where they can and a move to put interest rates up might put the blockers on people spending.”

Richard Peak, of property firm Helmsley Group, said: “The biggest thing from an inflationary point of view we are seeing at the moment, is a massive pressure on build costs. We’ve got borrowers, who we lend money to, and also on our own projects, where for certain types of materials, they can be up 35/40 percent from where they were.”

Gary Smith, of Tilney, said: “We could start to see an increase in redundancies as the furlough scheme comes to an end, which could temper spending and businesses that potentially would have failed without Government support may fail and again that may lead to a slowdown in the economy.”

David Broadbent, of Begbies Traynor, feared an increase in the number of insolvencies towards the end of the year.

He added: “People have been very reliant on the funds that have been readily available in the last 18 months. However, people haven’t been in a position where they’ve had to pay anything back so any slight increase in interest rates just will not help because people will be desperate to borrow in the next six months.”

Gill Gitsham, of GSM, said: “At GSM, we are in manufacturing, and we’re really hit with issues with the supply chain in so far that we’ve had to overstock to take advantage of price rates to try to bring the cost of our raw materials down.”

She also raised concerns about recruitment, saying they were having to compete against the likes of the hospitality sector and as a result “are having to pay a higher and higher wages bill”.

Chris Greenall, of PIB Insurance Brokers, said: “We act for quite an eclectic range of clients and the effect of cost-push inflation is having a massive effect upon businesses and I think increasing the interest rate would have a harmful effect upon those businesses.”

Bob Gammie, of York Business School, concurred with other Shadow MPC members that the economic picture currently was ‘gloomy’. He added: “We need confidence in the economy and an increase in interest rates would impact on that.”

ENDS