Shropshire business leader concerned at timing of interest rate rise

Richard Sheehan, chief executive of Shropshire Chamber of Commerce, said he is concerned the hike has come at a time when considerable uncertainty remains over Brexit in the business sector.

The rate has risen by a quarter of one per cent, from 0.5 per cent to 0.75 per cent – its highest level since March 2009.

The move will increase the cost of more than three-and-a-half million residential mortgages that have variable or tracker rates.

But it will be welcomed by savers, who could see a lift in their interest rates over the coming month.

Mr Sheehan said: "It is not a surprise. It has been mooted for some time and been deferred and deferred and deferred.

"I would question the timing of the decision. It has come at a time when consumer confidence is not great and generally businesses are waiting for definite action around Brexit. This has just added to the degree of uncertainty.

"It maybe a small rate rise, but it is the psychological impact it can have.

"There is so much going on and this will only add to the uncertainty; consumer spending is one as is wage demand. Employers want their employees to have a good standard of living but they have to maintain a sustainable business. It is a double-edged sword.

Harsh

"The proof will be in the pudding and we will have to see how things pan out."

The Bank's Monetary Policy Committee had been expected to raise interest rates in May, but held fire because the economy went through a weak patch at the start of the year – partly because of the harsh weather conditions, dubbed the Beast from the East.

Led by governor Mark Carney, the Bank is now confident that the dip was temporary and that economic growth will recover from the 0.2 per cent rate seen in the first quarter, to 0.4 per cent in the second quarter and maintain that pace later in the year.

The Bank is sticking to previous guidance that there will be further interest rate rises, but Mr Carney said these will be "limited and gradual".