News: Interest rate rise will widen north south divide says expert
Paul Moorhead of Rotherham insolvency practice, Moorhead Savage, is warning that a predicted rise in interest rates could place an intolerable burden on some of the region's businesses.
And he says that talk of the benefits of that interest rise is indicative of the widening gap between north and south.
Established in RiDO's Moorgate Crofts business centre in Rotherham, Paul leads a team at Moorhead Savage offering high quality, professional, impartial and ethical help and debt advice to both companies and individuals.
Paul said: "Mark Carney, the Governor of the Bank of England, predicted when he visited Rotherham in the spring that interest rates would rise but that rise now looks like it will come sooner than expected."
In March, Carney visited the University of Sheffield Advanced Manufacturing Research Centre (AMRC) with Boeing in Rotherham and praised it for its contribution to UK manufacturing's recovery. In his last speech before the general election, the Governor of the Bank of England talked of the effect of the strong pound, especially on exporters, and the need to provide appropriate stimulus to the economy to bring inflation back up to target. He expected a gently rising path of interest rates over the next few years, adding: "But rates will still be relatively low and they will have been low for a long time."
Moorhead responds: "The original prediction was for a rise soon after Christmas but the latest inflation figures suggest that rise could come as soon as this autumn.
"The risk is that the cost of borrowing will increase and it may be that people who have maintained relatively high levels of borrowing because at the moment it is affordable, will suddenly finds that payments becomes increasingly difficult to keep up.
"At the same time as the greater cost of borrowing, wages are also rising and that will mean further pressure as overheads increase."
Although the general national prediction is for an improving economy, Paul added that there was little sign of that upturn in the Yorkshire region.
"In South Yorkshire particularly I don't see much evidence of genuine optimism," he said.
"At Moorhead Savage we are still seeing people come to us saying that times are difficult and many businesses are still getting into debt and having to go bust as a result of these continuing hard times.
"The sectors which are really growing are financial services and parts of the property market and both these sectors tend to favour the south east, with the preponderance of companies located inside the M25.
"In the north of England there are still many manufacturing based businesses and it is these businesses that are still struggling, especially as the strength of the pound is limiting their ability to export."
Moorhead Savage website
Images: Moorhead Savage
And he says that talk of the benefits of that interest rise is indicative of the widening gap between north and south.
Established in RiDO's Moorgate Crofts business centre in Rotherham, Paul leads a team at Moorhead Savage offering high quality, professional, impartial and ethical help and debt advice to both companies and individuals.
Paul said: "Mark Carney, the Governor of the Bank of England, predicted when he visited Rotherham in the spring that interest rates would rise but that rise now looks like it will come sooner than expected."
In March, Carney visited the University of Sheffield Advanced Manufacturing Research Centre (AMRC) with Boeing in Rotherham and praised it for its contribution to UK manufacturing's recovery. In his last speech before the general election, the Governor of the Bank of England talked of the effect of the strong pound, especially on exporters, and the need to provide appropriate stimulus to the economy to bring inflation back up to target. He expected a gently rising path of interest rates over the next few years, adding: "But rates will still be relatively low and they will have been low for a long time."
Moorhead responds: "The original prediction was for a rise soon after Christmas but the latest inflation figures suggest that rise could come as soon as this autumn.
"The risk is that the cost of borrowing will increase and it may be that people who have maintained relatively high levels of borrowing because at the moment it is affordable, will suddenly finds that payments becomes increasingly difficult to keep up.
"At the same time as the greater cost of borrowing, wages are also rising and that will mean further pressure as overheads increase."
Although the general national prediction is for an improving economy, Paul added that there was little sign of that upturn in the Yorkshire region.
"In South Yorkshire particularly I don't see much evidence of genuine optimism," he said.
"At Moorhead Savage we are still seeing people come to us saying that times are difficult and many businesses are still getting into debt and having to go bust as a result of these continuing hard times.
"The sectors which are really growing are financial services and parts of the property market and both these sectors tend to favour the south east, with the preponderance of companies located inside the M25.
"In the north of England there are still many manufacturing based businesses and it is these businesses that are still struggling, especially as the strength of the pound is limiting their ability to export."
Moorhead Savage website
Images: Moorhead Savage
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