Interest rates rise and rise
| Date Added: Fri July 20 2007 |
The pressure of interest rate increases since last August has failed to dampen British businesses' resolve.
The British Chambers of Commerce Q2 Quarterly Economic Survey shows a mixed outlook. The Manufacturing sector have rallied strongly with a marked improvement in balances in practically all areas, unlike the service sector which has demonstrated a distinctly patchy performance.
Export balances in the service sector recorded large Q2 declines, and the investment balances have also weakened, however, all is not doom and gloom. Stronger employment and employment expectations balances are encouraging.
David Kern, Economic Adviser to the British Chambers of Commerce, comments: "Given the resilience signalled by these results we are concerned that they could reinforce the pressures for further interest rate increases. Such a reaction however would be unjustified. Labour costs remain under control and the Q2 QES shows falls in the capacity utilisation balances. Although growth is robust, there is no evidence that the UK economy is overheating.
The prospect of relentless monetary tightening is very worrying for our members. The expected slowdown in UK economic activity may commence later than previously envisaged, but there is a distinct risk that the slowdown would be very sharp and painful." |
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