Business leaders from across the region are urging the Monetary Policy Committee to maintain interest rates at their current level on Thursday and not to use an increase in rates as a tool for getting us out of the economic crisis.
Katie Teasdale, head of policy at Birmingham Chamber of Commerce and Industry (BCI) said: “Increasing interest rates will hit every area of business. It will stifle investment and employment. We need to encourage companies to invest, take more risks and innovate.
“Although there have been reports of green shoots of recovery in both the property and manufacturing industries, the situation remains fragile and the risks of a relapse cannot be ignored.
“Even keeping interest rates low, we expect the UK GDP figures to show a modest growth and certainly be below the historical average. Thereafter, we expect modest increases to 1% before the end of 2010, and to 2.50% by the end of 2011 to ensure that CPI inflation stays on target.
“We are looking to the new coalition government to support British industry with favourable announcements in the emergency budget on 22 June. While we understand the need for major cuts to reduce the UK deficit we need to restore business investment.
“The creation of a positive tax environment that enables businesses to create jobs and wealth as well as policies which enable a new culture of enterprise, entrepreneurship, risk taking and innovation is paramount to creating a more stable economy in the future.”
Business leaders in Coventry and Warwickshire also called for interest rates to remain at 0.5 per cent.
Inflation is still higher than the Government’s target but the Coventry and Warwickshire Chamber of Commerce is urging the Bank of England to stick to its policy of looking at the bigger picture.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “While inflation is still above the Government’s target, the Bank of England has outlined why that is and says it believes it will start to drop later in the year.
“In the meantime, it is crucial for businesses that interest rates remain low because there is no real evidence yet that there is a sustainable economic recovery.
“Low rates is one of the conditions for helping business to grow so we strongly urge the Bank to maintain that.”