For the first time in a long time, some members of the North East Shadow MPC are advocating for a cut in interest rates.

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.

Nicola Bellerby, partner at Clive Owen LLP said: “I’m voting to hold interest rates this time.

"Inflation remains stubborn and higher than anticipated so this puts pressure to keep interest rates high despite expensive borrowing costs for businesses and those with mortgages. It seems that job vacancies are falling and at the same time unemployment has actually increased so there is a weakening in the labour market.

"Many costs such as mobile phones and car insurance are still rising steeply and this increases costs for businesses and individuals alike. Further shocks may follow particularly if energy prices are affected by what’s going on in the Middle East.”

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Nick Pope, managing director of Premier Tech Aqua, said: “I would vote to reduce the rate by 0.5%. People coming off fixed rates this year are really going to struggle to pay their mortgage, which could have a big negative effect on the housing market and dampen demand in the wider economy.”

Tim Bailey, partner at Xsite Architecture said: “Many industry indexes and forecasts are indicating significant slowing in the construction sector. Anecdotal evidence suggests that early enquiries about project viability and land uses are still healthy but contracts for delivery are down.

"Sector behaviours around diversification, geographical spread, pricing competition and claims action all indicate a tightening in the industry. Trade press over the last three months has predicted multiple company failures across scales as well. This pessimistic picture is not yet shared by architects who reported in April a slight upturn in activity.

"Overall though with inflation generally heading in the right direction, I would consider a quarter to half-point interest rate reduction to be prudent now.”

 

Sector behaviours around diversification, geographical spread, pricing competition and claims action all indicate a tightening in the industry.

 

Martyn Pullin, partner FRP Advisory said: I am closer to advocating for a fall in interest rates than I ever have been given a further fall in CPI inflation along with a fall in consumer spending in April (which should have a deflationary effect) however inflation is still stubbornly higher than the BofE target of 2%.

"It is difficult to tell whether higher interest rates continue to have a significant impact on inflation given the impact of global conflicts (and soon to be) agricultural yields on prices but I do feel interest rates should once again be frozen. For me, it is still too early to start reducing rates.”

Graham Robb, senior partner at Recognition PR said: “I voted for a small cut. My reason is I think we can err on the side of confidence in the UK because the current interest rates are being driven partly by American policy, but American inflation is more stubbornly high and we're more akin to the European markets at the moment."

“So I think there's no danger in a cut now. But I would only want a modest cut because there are quite a few people, more savers than borrowers, and they are now beginning to see for the first time a return on their savings that's meaningful when it's been so low for so long.”

Donna James, research director at Populus Select said: “I vote for rates to remain as they are. Inflation is definitely on a downward trend but, although some more optimistic commentators were expecting inflation to be under 3% by May, the rate is at 3.2%.

"Quantative tightening is having its desired effect, but we have not yet reached the 2% inflation target. While stagnation or contraction of the economy is a real concern, in my opinion, a worse outcome would be instability for the market which would adversely affect domestic and international investment in the long run. Within the next three months if trends continue as they are, my vote is likely to be different.”