BUSINESS leaders in the region were last night contemplating the implications for the North-East economy after interest rates hit their highest level in six years.

Only days after a survey revealed that a third of companies in the region predicted they would be forced to lay off staff if interest rates rose again, the Bank of England's Monetary Policy Committee (MPC) announced a quarter point rise to 5.5 per cent.

The figures, released by the North-East Chamber of Commerce (NECC), also revealed that 77 per cent of companies said they expected future investment plans to be threatened if rates rose again.

The MPC's decision marked the fourth rise in ten months on the back of inflation, moving further away from its two per cent target with a surprise figure of 3.1 per cent in March.

Last night, business figures and organisations in the region said that while the latest rise was not a shock, it still had potentially-damaging implications for the North-East.

And alongside the potential impact on companies, homeowners were also set to be hit hard, with an average of £16 a month being added to repayments on a £100,000 mortgage.

Richard Bottomley, NECC vice-president, said: "NECC's snap survey of members earlier this week showed how potentially problematic this rise could be, with 77 per cent of respondents saying the increase will threaten future investment plans, and a third saying it is likely to have an impact on employment.

"We are very concerned about the impact these increases are having on an otherwise buoyant North-East economy."

Calls were also made to urge there were no more increases in the rate in the foreseeable future.

Sarah Green, regional director of the CBI, said: "While we fully accept the need for the rate rise, we see no reason for a further increase at present, as the impact of the one per cent increase in rates since last August should be sufficient to keep inflation pressures into 2008 under control."

Paul Woolston, of PricewaterhouseCoopers Newcastle practice, said: "A further rise in the base rate must not be a foregone conclusion, and we would urge the MPC to allow some time for the impact of this change to filter through before any additional increases are made."