Bank of England opts for status quo on interest rates
BANK of England policy makers have opted to continue with the freeze on interest rates as they attempt to bolster the UK economy.
The Bank’s Monetary Policy Committee has also resisted the temptation to pump more money into the economy in the form of October’s £75bn extension of Quantitative Easing.
Confidence levels at the start of the New Year remain fragile and lingering fears over the health of the Eurozone continue to cast a cloud over the economy.
Andrew Connors, Area Director for Lloyds Bank Corporate Markets in the West Midlands, said: “The figures for the final quarter of 2011 were better than expected. Activity in the construction, manufacturing and services sector all picked up somewhat which suggests that we should expect to see a 0.1% increase in GDP, rather than the predicted negative growth.
“Inflation also appears to be falling back with an easing in oil and petrol prices which is good news for consumer spending. Figures show that this is beginning to be seen in price expectations as the charges businesses’ make for goods are also starting to fall.
“However, these encouraging points are the exception rather than the rule. Business and consumer confidence fell at the end of last year as worries about the Eurozone and its effect on UK financial markets deepened. In addition, our own data shows that job security has fallen to a record low across most parts of the country.
Sara Fowler, senior partner for Ernst & Young in the Midlands, said: “As the economic recovery continues to stall it will be a surprise if the rates are raised before the second half of the year.
“While the UK economy remains challenging, there was positive news for the West Midlands this week with figures released by the Centre for Management Buy-Out Research (CMBOR) finding that the value of West Midlands management buy-outs in 2011 exceeded £1bn for the first time since 2007.”
Mark Smith, regional chairman at PwC in the Midlands, said: “We are unlikely to see further moves on quantitative easing before next month’s inflation report.
“As we start the year, businesses in the region need to keep on pursuing growth opportunities and while the economic outlook for some sectors is tough, for others, particularly those involved in exporting to faster growing economies, opportunities exist to achieve growth and deliver healthy profits.”
