Coventry & Warwickshire sustainability threatened by interest rate rise

BUSINESS growth in Coventry and Warwickshire could be wiped out if the Bank of England opts to increase interest rates, the area’s chamber of commerce has warned.

The business organisation has called on members of the Monetary Policy Committee not to bow to inflationary pressures and to urged them to look at the bigger picture when they sit down tomorrow.

Chamber chief executive Louise Bennett said that while many experts were claiming it was only a matter of time before rates went up in order to counter inflation, this was not what was needed to sustain the fragile economic recovery.

“The above inflation figures are certainly not coming from any kind of feel-good factor spending spree,” she said.

“It is the bare essentials that are driving this rise such as fuel prices at the pump, which has gone up to record levels in recent days.

“That adds inflationary pressure into almost every other aspect of the economy.”

She warned that as seen from recent data, the economic recovery had yet to show any sign of sustainability – particularly when GDP figures from the last three months of  2010 were taken into account.

“What we need, therefore, is the interest rate to remain as low as possible and for all of our banks to start lending to viable companies that want to grow and invest.

“On top of that, we urgently need action in this month’s Budget with regards to fuel duty,” added Ms Bennett.