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Interest rates rise opposed by BCC

Published On 6 March 2007 at 14:38:24

The possibility of further interest rate rises by the Monetary Policy Committee (MPC) has been opposed by UK businesses.

In view of the MPC's forthcoming meeting this week, the British Chambers of Commerce (BCC) has warned that following three rate rises since August 2006, a further increase could be extremely detrimental to the economy.

The BCC advises that UK business is in need of a period of economic stability and believes that regardless of whether rates remain at 5.25 per cent or not, there is a strong likelihood of a "marked slowdown".

David Kern, economic adviser to the BCC, commented: "The global economic situation is much more fragile and dangerous than the recent euphoria might have indicated. An increase in UK interest rates at this time would pose unacceptable risks for the UK economy and should be forcefully rejected.

"All the recent evidence has supported our view that the threat of inflation is receding. Indeed, there are very realistic prospects that UK inflation will decelerate sharply in the next few months.

"But there are still uncertainties relating to the current wage round and it is critically important that the government responds firmly to excessive public sector wage claims."

 

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