NORTH-EAST business leaders have unanimously backed a hold in the interest rate as the economic recovery gathers pace in line with the recent GDP figures from the final quarter of 2013.

The North-East Shadow Monetary Policy Committee (MPC) voted 10-0 in favour of holding the current interest rate at 0.5 per cent to allow for the economy to take hold and relieve pressure on the region.

Members also agreed there is no need for any further Quantitative Easing (QE).

A partnership between The Northern Echo, he North East Chamber of Commerce (NECC), and Tees Valley-based accountancy firm Waltons Clark Whitehill, the North-East Shadow MPC looks at 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.

Heather O’Driscoll, managing partner at Waltons Clark Whitehill, said: “The positive GDP figures issued last week, coming quickly after the fall in unemployment, are very good news for the economy.

“However, it is important to look at the regional situation and, particularly in relation to employment; we are still a long way from where we need to be before any change in interest rates is considered.

“Additionally, we are in no position for any further quantitative easing.

“Mark Carney should hold steady until the recovery has had more time to bed in.”

Ross Smith, NECC director of policy, argued a hold in the interest rate would be sustainable as unemployment in the North-East is still an issue.

He said: “We’re seeing strong signs in the economy and in our businesses, as well as very good results in the latest GDP statistics for the final quarter of 2013, which gives us confidence for the year ahead.

“However, unemployment is still far too high, especially in the North-East which is still a long way off the national level, which needs to be taken into consideration, so a hold in the interest rate would be sustainable.”

Rachel Turnbull, chief executive of TT2, operators of the Tyne Tunnels, welcomed the recent GDP figures, but feels that construction and infrastructure output remains weak.

She said: “Last week’s GDP figures were very welcome news for the economy.

“However, the drop seen in construction figures highlights a need to focus upon infrastructure and we have demand for a number of projects here in the North-East that can play a strong part in boosting that sector.

“At present, any adjustment in interest rates would hamper efforts to support the infrastructure projects by increasing financing costs, so I would urge the Bank to keep interest rates at their present level.”

Nigel Mills, chairman of the Entrepreneurs’ Forum, feels that despite the positive growth figures, consumers are still being hit hardest.

He said: “The economy is generally getting better, but consumers have less money and with prices and these margins still too high, the interest rate should be held until consumers have more money in their pockets to cope with a rise.”

Catriona Lingwood, chief executive of Constructing Excellence in the North-East, believes that despite a drop in construction figures, there is reason to be optimistic for the year ahead.

She said: “The economy is looking rosy with productivity up and the creation of more jobs.

“There will also be a significant amount of construction and maintenance activity with retailers and industries expected this year, despite a slight downfall in activity at the back end of last year.”

Ajay Jagota, chief executive of Keep It Simple Group (KIS), agreed with Mr Mills that consumers are being stretched, adding that any further QE would only lead to more problems.

He said: “We’re seeing a slow build-up of confidence with the recent figures showing good growth in the GDP, but the consumer is still feeling the strain.

“We have had enough quantitative easing, and with the economy improving, there is no further need for it as this would only lead to more problems and debt that would need to be solved later on.”

Jim Willens, chief executive of Newcastle Building Society, has seen an increase in the number of mortgage applications, but although the economy is improving, a rise wouldn’t be appropriate.

He said: “We are seeing an increased level of activity in the housing market in terms of receiving more mortgage applications and we’re doing our best to meet this demand.

“The economic position is improving, but it is still not at a comfortable level for a rise in the current rate.”

Graham Robb, senior partner of Recognition PR, believes the current forward guidance policies by the Bank of England are necessary and will put the economy in a good position for when interest rates do rise.

He said: “The Bank is giving strong and appropriate forward guidance measures, which is preparing people for when the interest rate rises.

“So, for the time being I would like to see the interest rate held as the economy is strong, but the North-East impetus is that it needs to be held low.”

Andrew Sugden, head of external relations at Northumbria University, feels any rise in the current rate would prove costly for the North-East.

He said: “The wider economic context is that we’re in a situation where any imminent increase would affect the progress made.

“In the North-East, house prices remain static and unemployment is the highest in the country, so we need to be careful as any increase would be too costly.”

Tony Slimmings, managing director at WR Planning Group, rounded off the voting by agreeing interest rates should be held as the economy remains weak.

He added: “We’re seeing a lot of indicators that the economy is growing, but average earnings are at their lowest and it is still a weak economy, which couldn’t cope with a rise at this moment.”