Interest rates at historic low: the local reaction

As the Bank of England drops interest rates to an all-time low of just 0.25%, TheBusinessDesk.com gauged local reaction and asked what it will mean for East Midlands businesses and the wider economy.

Gary Digva, sales director, Space Data Centres: “I see this now as an opportunity for growth. I know people worry about the a possibility of the UK falling into recession but I feel the opposite – however this depends heavily in what markets you are involved in.

“As a provider of data services we see the weakened pound as a position of strength, allowing us to open our client base to the European markets, of course not withstanding the challenges of Brexit. The Bank of England’s decision to

Gary Digva

lower interest rates will help us to find fund growth within the business allowing us to be more competitive.

“Of course we can also consider further afield with the USA being one possibility as the US Dollar has gained significant strength and if Trump wins the election this would potentially continue. My only concerns are for the overall UK economy as we are mostly a nation of importers as opposed to exporters.

“I do feel we are exposed to the risk of imported inflation, costs of goods and services could rise due to the weak pound so we can only expect this will be supported by the UK marketing appealing to more investment due to the weak pound. It is a fine balancing act and one that has risks attached with no safety net. I would advised caution.”

Ian Hodgkinson, Hodgkinson Builders: “It is a bit of a double-edged sword from our point of view. Cutting interest rates is good from one aspect as it should stimulate growth in the economy, lower mortgages and borrowing costs.

“I am also pleased that Mr Carney took a tough stance on banks with the introduction of the Term Funding Scheme, forcing the banks to lend money. Despite this, to reduce record low interest rates even further concerns me because what can the Bank of England governor see that we cannot? In addition, what does Mr Carney have left in his bucket of builders tools to throw at the problem that Brexit has created?”

Karan Kaur

Karan Kaur, Cavendish: “With fears that Brexit would stunt the growth of the property market in Nottingham, the cut of interest rates couldn’t have come at a better time for people wanting to invest in the East Midlands area. Although it could be deemed as a ‘smart move’ from the Bank of England to dispel said worries and doubts, the drop ought to only encourage more people to spend rather than save. Investment means growth and subsequently a restoration of faith in our local economy”

Ben Lawrance, office managing partner at RSM in Leicester: “The market was expecting and the market received a sizeable stimulus from the BoE today.

“Whilst the availability of hard data at the moment is relatively thin, the BoE are clearly looking ahead and anticipating a significant slowdown in the economy. These measures will help but, by themselves, will not be enough to restore momentum.

“However the combination of the relative stability in the financial markets since the vote, the action from the BoE and indications of some additional flexibility in interpreting the balanced budget goals of the Conservative government all imply a concerted effort to create the support and stability the business world craves whilst the Brexit negotiations crank into gear.

“We expect now a period of relative calm over the Summer whilst the business world waits for Q3 data, the US election and the Autumn statement which together will help paint a clearer picture of 2017. Based on the feedback from our clients across the East Midlands and beyond, at the moment the BoE forecast for 2017 looks fairly pessimistic. Only time will tell.”

Steve Wooler, BWB: “The Government should be spending the money it is pumping into the economy on the construction industry, which is undoubtedly stalling post-Referendum. Confidence is low, and we have a skills gap. The last thing we need is another recession. The investments should be made in social and economic infrastructure such as hospitals and schools. We’ve had precedents, and Keynsian economics shows that if you do this it will stimulate growth in the economy.

“They need to use the money they’re going to inject into the economy very wisely.”

Arran Bailey ALB Investments: “With the interest rate dropping it should help first time buyers and obviously make it cheaper for businesses to borrow money. We think that it is a positive that this is happening.”