Employers in Peterborough shrug off the first interest rate rise in a decade

The Bank of England.  Photo: Tim Ireland/PA Wire pa_news_20080421_182002_economy_
The Bank of England. Photo: Tim Ireland/PA Wire pa_news_20080421_182002_economy_
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A number of employers in Peterborough have shrugged off the Bank of England’s first interest rate rise in a decade.

The move, which saw the cost of borrowing rise from 0.25 per cent to 0.5 per cent, is aimed at tackling rising inflation, which the BoE fears will rise to 3.2 per cent this autumn.

It is the first rate hike since July 5, 2007. The BoE cut the rate to 0.25 per cent in August last year.

Ben Atkins, chairman of the Vogal Group, in Kingston Park, Fletton, which specialises in providing mechanical and electrical installations for a range of business sectors from petrochemical, pharmaceuticals to food and drink, said: “We have no complaints.

“During the last 10 years we have expanded considerably and have benefitted from low rates of interest and support from the banks.

“Now we are getting cash rich and in a position to benefit from the higher rates on savings.”

George Smith, managing director of Kamarin Computers, in the Metro Centre, Welbeck Way, Woodston, said: “The rates increase will not have an impact on us as the company is self-financing.

“But many of our customers who are fast growing and have taken out significant funding may feel an impact.

“It has been a long time since rates last went up and businesses don’t tend to like change. Some may choose to wait and see on investment decisions.”

Barry Cornett, managing director of agro-chemical maker Safapac, in Orton Southgate, said: “It won’t have any real impact on us as the company doesn’t really have any borrowings. Our customers are well funded and I doubt if it will have much of an impact on them either.

“I think the increase is actually a good indicator that the economy is going the right way.

“Interest rates of about two per cent is where they should be and anything else smacks of desperation. I think the economy is moving the right way.”

However John Bridge, chief executive of the Peterborough Chamber of Commerce, said: “We question whether this rise was necessary. It is not welcome.

“Following the EU referendum result, politicians have managed to create a fog of uncertainty.

“Business needs stability and encouragement to invest, It does not need any extra costs.”

The Yorkshire Building Society Group, which merged with the Norwich and Peterborough Building Society six years ago, announced it will add the full increase to all variable rate accounts for savers.

Borrowers on a Yorkshire, Chelsea or Norwich & Peterborough standard variable rate mortgage will see their rate increase by 0.25 per cent to 4.99 per cent.

Mike Regnier, chief executive at Yorkshire Building Society, said: “It has been a tough few years for savers, so we’re delighted to be able to pass on the full bank rate increase.

“With no external shareholders to satisfy we have protected savers as far as possible during the extended period of a record low bank rate, maintaining an average interest rate on our accounts which has been consistently higher than the market average.

“Our decision today to pass on the full increase to variable rate account holders reflects our mutual ethos of putting our members first.”

Rain Newton-Smith, chief economist at the CBI, said: “Businesses will be watching the reaction of consumers closely and what’s important is the pace of any future rises.

“As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.

“While it’s the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5 per cent it remains near rock bottom.”