Chamber News 3rd November 2017
SCC Comment on Interest Rates Announcement
The Monetary Policy Committee announced their decision to raise interest rates today by 0.25%, increasing the Bank of England base rate to 0.5% for the first time in a decade.
Responding to the rise, Liz Cameron, Chief Executive, Scottish Chambers of Commerce said:
“Scottish businesses will be disappointed that the Monetary Policy Committee has elected to make its first interest rates rise in a decade, during a period of profound economic uncertainty. The immediate effect of which was to bring the value of the pound down by one cent against the US dollar.
“Recent labour market statistics have continued to illustrate the effect of inflation on household incomes, and this decision will do little to reassure consumers, with UK Finance estimating that the rates rise will add approximately £12 a month to the average variable rate mortgage payment.
“This announcement increases the need for policy makers to be sensitive to the economic context with further activity. The Scottish Government must consider the effects of this rise (and potential subsequent rises outlined in the Bank’s forecasts), when evaluating their recently announced options for Income Tax rate rises.
“Furthermore, there was recognition from the MPC that growth in the economy must be driven essentially by productivity growth, taking into account the tight labour market supply. This emphasises the need for The Chancellor to unveil supportive measures to increase business investment in the forthcoming budget.”