Business leaders in Peterborough react to first interest rate rise in a decade

Business leaders in Peterborough have reacted to the Bank of England's first interest rate rise in a decade.

Thursday, 2nd November 2017, 1:15 pm
Updated Tuesday, 12th December 2017, 8:09 am
The Bank of England. Photo: Tim Ireland/PA Wire pa_news_20080421_182002_economy_

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.

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

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“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.”