Interest rate hold good for business, say leaders
The decision to hold interest rates for a 27th consecutive month has been welcomed by West Midlands business leaders, who are urging the government to "hold its nerve" and stick with the historic low of 0.5 per cent.
Christine Braddock, president of the Birmingham Chamber of Commerce group, said: "High inflation and increasing utility prices point to a rise at some point in 2011, possibly in November, but timing is crucial. As long as wage increases remain subdued, the MPC should hold its nerve for the time being.
"Our members continue to inform us that they are benefitting from the low interest rate. However, at the same time, inflation is currently the prime concern."
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the decision was "the correct course of action".
She said: "The UK economy needs low interest rates to continue, what has been so far, a fragile recovery from the recession.
"We understand the fact that inflation is higher than anyone would like but that is largely due to international pressures and there is certainly no case to say demand needs to be dampened in the UK."
PwC in the Midlands shared the chambers' viewpoint, adding that businesses in the region "need stability", urging the government to keep rates on hold until economic recovery is more firmly established.
Mike Steventon, senior partner of KPMG in Birmingham, added that the hold could be a sign that interest rates will not rise much before 2012.
"The fiscal squeeze is now starting to bite and with the Chancellor ruling out a U-turn on the UK’s austerity cuts, the immediate economic environment remains challenging. It may be at least another six months before we see an interest rate change," he said.
