Interest rates should be fixed for a year, says Sussex Enterprise chief

Mark Froud, chief executive of Sussex Enterprise.
Mark Froud, chief executive of Sussex Enterprise.

A SUSSEX business chief said the Monetary Policy Committee should guarantee that interest rate rises will not be ‘on the agenda’ for at least a year.

The MPC announced on Thursday September 8 that interest rates would stay at a record low of 0.5% for a record 29th month, and that no emergency action would be taken to stimulate the economy.

Mark Froud, chief executive of Sussex Enterprise, said: “Greater clarity on the outlook for interest rates would underpin business confidence.

“In the past any positive economic news, however modest, has often prompted pressures for higher rates, thus creating new business uncertainties.

“To avoid this situation from recurring, we believe the MPC should make clear that, unless circumstances improve very significantly, interest rate increases will not be on the agenda for another year.

“In the US, the Federal Reserve has stated that it expects to keep interest rates at very low levels until at least the middle of 2013. Sussex businesses would welcome a similar move in this country.”

Mr Froud also commented on recently released manufacturing figures, arguing that the weak numbers reinforce the need to boost growth.

Manufacturing output in July was up 0.1% on the month, up 1.9% on the year.

“These figures confirm a picture of slow growth in manufacturing but were marginally better than expected and should not encourage further doom and gloom about the economy,” he said.

“We expect growth to remain sluggish in the third quarter, although we are unlikely to see a new recession.

“In the last three months, I’ve met with over thirty manufacturing companies in Sussex and their view is that whilst times are tough they continue to grow and are positive about the future.The manufacturing output figures show there is no need for the government to abandon its fiscal programme, however, everything must be done to ensure that the manufacturing recovery, though weak, does not falter.

“The economic situation remains uncertain and the Monetary Policy Committee must keep interest rates as low as possible for as long as possible. Equally, the government should be more proactive in pursuing growth-enhancing policies that will help Sussex businesses create jobs, export and invest.

“We believe particular attention should be paid to helping smaller firms break into fast-growing emerging markets, not just the slower-growth economies of Europe and North America.”