Member Article

Interest rate rises impact on business

Rising interest rates are taking their toll on the North East economy with firms in both the manufacturing and service sectors having a more difficult time, according to new data. The North East Chamber of Commerce’s quarterly economic survey, the North East Business Barometer, showed order books for both domestic and export business were good, but long-term planning was paying the price of a succession of rate hikes. Manufacturers reported better performance than the service sector in recent months. Businesses responding to the survey indicated that investment in training was being scaled back – an area identified as a major problem for the future growth of the North East economy.

Andrew Sugden, NECC director of member relations, said: “Order books remain strong both for manufacturing and services but this is at the expense of medium and longer term investment plans. This is worrying when combined with the fall in business confidence because there is a fear that businesses will get the jitters. It indicates an underlying concern of an economic slowdown.”

NECC has argued in the past that the Government’s use of interest rates as the sole brake on inflation fails to address the differing needs of regional economies.

Mr Sugden said: “The Chancellor must find alternative means of checking over-heating in the South East economy without damaging business prospects here if this positive picture is to continue.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .