07/07/11

Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
 
“UK businesses support today’s MPC decision to leave interest rates unchanged. Given the fragility of the recovery, and the acute pressures facing firms and individuals, the committee was right to reject calls for early rate increases.

“With UK inflation at 4.5 per cent, and set to increase further in the next few months, the MPC is naturally concerned. But tightening policy in reaction to higher utility prices and internationally generated inflation would be a major mistake. Premature rate increases, at a time when the government is tightening fiscal policy through its deficit-cutting programme, could damage jobs and growth and should be avoided.

“Signs that the global economy may be slowing, and the worsening debt problems facing the Eurozone, increase the challenges facing UK exporters and reinforce the case for postponing interest rate increases at least until the final three months of 2011. As long as domestic wage pressures remain muted, the MPC should avoid any action that increases risks of an economic setback. If the economy weakens further, the committee should consider increasing the QE programme above £ 200million.”

Ends

Notes to editors:

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people. For more information visit: www.britishchambers.org.uk

Media contacts:

Liz Larvin
Tel: 020 7654 5813 / 07825746812
Email: l.larvin@britishchambers.org.uk

Lisa Morrison
Tel: 020 7654 5812 / 07717682221
Email: l.morrison@britishchambers.org.uk