Rate rise would be damaging, says Cameron

THE Prime Minister has warned of the “unthinkable damage” a sharp rise in interest rates would bring to the UK economy.

Speaking during a visit to Yorkshire yesterday, David Cameron said low interest rates meant there was more spare money to invest in the future.

Mr Cameron made the point as Bank of England policymakers maintained interest rates at their historic 0.5% low and held firm against pumping more cash into the economy through quantitative easing.

“It is hard to overstate the fundamental importance of low interest rates for an economy as indebted as ours and the unthinkable damage that a sharp rise in interest rates would do,” he said, adding that low interest rates meant families didn’t have to spend spare cash on interest bills.

“A sharp rise in interest rates – as has happened in other countries which lost the world’s confidence – would put all this at risk with more businesses going bust and more families losing their homes.”

David Kern, chief economist at the British Chambers of Commerce, said the Bank’s Monetary Policy Committee had made the right decisions but urged the body to make better use of the existing QE programme.

Mr Kern also called for the government’s pledge to create a British Business Bank to be acclelerated as a means of increasing lending.