Business West, the organisation behind the Initiative in Swindon, has called on the Bank of England not to raise interest rates despite a further fall in unemployment across the UK.
Welcoming the latest labour market figures – which show the national unemployment rate has fallen to 7.1%, its lowest level since April 2009 – Business West managing director Phil Smith insisted it was too early to talk about increasing the cost of borrowing.
Bank of England Governor Mark Carney has said a decision on the future direction of interest rates would be made when the jobless rate reaches 7%. Money markets are already starting to write in a rise, with some economists expecting an increase later this year.
But Mr Smith said: “We still believe that there is no sound case for such a move. Mark Carney has been clear that the 7% target is only an indicator, and it would be foolish to choke off the recovery at this stage.”
He said it was reassuring that the latest minutes from the Bank’s rate-setting Monetary Policy Committee (MPC) suggested that the committee saw no immediate need to increase rates.
“With inflation down to 2% and earnings growth at only 0.9% there are no strong domestic inflationary pressures in the economy,” added Mr Smith.
“Businesses require stability in order to continue to drive the recovery, and the Government now needs to place more emphasis on improving access to finance so that firms have the ability to grow.”
Nationally unemployment was down and employment was up. Youth unemployment, a serious concern to many commentators, also fell although the jobless rate for this age group remains high.
Unemployment increased in the South West by 15,000 to 6.8% – showing a 0.5% rise on the last quarter and a 1.4% rise on the year.
However, the official figures from the Office of National Statistics shows despite this increase the South West still remains below the national average and is in the bottom four regions in England. The number of young people unemployed dropped by 5,000 to 20.3% in the region, a 0.2% decrease on the quarter.