FOLLOWING the holiday celebrations North-East business leaders yesterday delivered a sobering message that 2010 would not bring an explosive escape from recession.
The Northern Echo’s Shadow Monetary Policy Committee, run in partnership with Arlington Financial of Hartlepool and the North East Chamber of Commerce (NECC), also called on the Bank of England to leave interest rates at 0.5 per cent when it meets tomorrow.
Members of the committee, representing a wide cross section of business sectors, felt at best that there would be a steady climb to recovery, or that 2010 would be a bit better.
But there were also concerns about increased unemployment and more corporate insolvencies in the next 12 months, with the looming General Election also creating a state of limbo.
The construction sector has been one of the worst hit by the recession and John Kindred of builders, Rok, believed that, despite the company’s Newcastle office hitting its targets for the year helped by a focus on building maintenance, the construction sector would be one of the industries to come out of recession last.
He said: “I think 2010 is a year of survival and building on the maintenance side.”
John Elliott, who runs Ebac dehumidifiers in Bishop Auckland, said: “The next year should be a bit better for various reasons.”
Keith Proudfoot, northern director of the Institute of Chartered Accountants for England and Wales, said his members were looking at 2010 as a year of steady progress.
Although he said business for corporate recovery experts last year had been nowhere near the levels anticipated, Mr Proudfoot believed this might change in 2010 as banks, which had been patient with companies for political reasons, might start to take a tougher line.
Kevin Rowan, regional secretary of the Northern TUC, said: “The overwhelming message from the workforce is that January is no different to December with people anxious about keeping their jobs, That is the first concern.”
Mr Rowan also felt there was a growing sense that pay freezes and short time working were beginning to bite.
NECC director of finance Isobel Robertson said: “We are the same as our members, it is challenging and I don’t think 2010 is going to be easier.”
And as arguments for keeping interest rates the same were put forward Nigel Mills, managing director of North- East retailer Mills, compared it to a life raft.
He said: “People are using the extra cash to pay back their debts, it is not encouraging excessive spending. You have to look at interest rates as a life raft.
“It is like a drowning man, eventually you have to get him to swim but you have to throw the life raft first.”
Kevin Rowan said: “One of the things that has allowed workers to cope with reduced income is that mortgages have gone down.”
He believed that a rise in rates might tip the balance.
But Mr Elliott felt they should go up, as he believed exchange rates were more important to the success of the economy, adding: “Interest rates should be at an appropriate level. People borrow money to make an investment and they should pay a reasonable fee. People who save money should be rewarded.
Interest rates are not for running the economy.”
The committee voted eight to two to keep rates as they were.
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