THE unprecedented situation the country and the economy find themselves in, and the surprise cuts in interest rates weighed heavily on the minds of the North East Shadow Monetary Policy Committee (MPC) members.

Members considered how the government could help business and the economy at this unprecedented time.

The MPC is a partnership between The Northern Echo and Darlington Building Society, which considers the state of the region’s economy and gives experts from a variety of sectors the opportunity to argue their case for a shift, or hold, in the rate.

Christopher White, finance director of Darlington Building Society, said: “We’re living in highly challenging times. The emergency reductions to bank base rate to 0.1 per cent take it to the lowest level in the Bank of England’s history.

“These changes should hopefully help support the economy in the coming weeks and months. Whilst it is positive that these changes support the economy, the changes will negatively impact the rates available to savers in the market. My view is therefore to help support savers the bank rate should not be reduced any further. Looking forwards I think it’s imperative that the Bank of England monitor the economy and look to return the rate to more normal levels, as soon as possible, once a recovery from the current circumstances is seen.

“All organisations are making decisions about how they can support people in these difficult times. Darlington Building Society branches remain open, on reduced hours, to ensure our members can access their finances. We are also discussing with members who have a mortgage with the Society about payment holidays in line with the announcements made by the Government.”

Jonathan Willett, director of Henderson Insurance Brokers, said: “I think all that can be done is for the Government and Bank of England to fully support the businesses that have been hugely affected by this crisis. This crisis will unfold over the forthcoming days, weeks and months.”

Chris McDonald, chief executive officer, Materials Processing Institute, said: “It is currently a ‘hold’ for me. Not really anywhere else for the bank to go at present.”

Paul Gibson, director and chartered financial planner at Active Chartered Financial Planners, said: “We have already seen significant amounts of financial support. The Bank of England reduced interest rates on March 20 to 0.1 per cent, its lowest ever level, and launched a fresh £200bn money creation scheme buying UK government and corporate bonds, designed to hold down the cost of borrowing and pump cash into the economy.

“The Chancellor Rishi Sunak on March 17 unveiled £330bn of government-backed loans for businesses equivalent to 15 per cent of the UK’S annual GDP as well as £20bn in direct cash support.

“This came less than a week after an initial £7bn package announced in the Budget.

“The message has been clear, we do not want businesses to fail and we do not want businesses to make staff redundant. The next steps would be to create a state grant to assist the self-employed however, this will need to be looked at and reviewed very closely to ensure that those who need it most benefit. Huge amounts of jobs are currently available (supermarkets, warehouses and logistics) and people may need to adapt in order to retain employment.

“All of the above measures send a positive message and we do need confidence in these difficult times. These measures will be ok for a few months however, we need to ensure that people do not rely on the state long-term as this will damage the economy for years to come.”

Graham Robb, senior partner at Recognition PR, said: “Now is the time to return to quantitative easing because the temporary emergency needs a lot of money swimming in the economy to maintain confidence and keep people’s businesses afloat.”

Daniel Williams, solicitor at Latimer Hinks, said: “Briefly, I say keep rates as they are. Quantitative easing may need to be considered, but not implemented at this stage, depending on the effects of coronavirus in the coming weeks and whether the economy needs such stimulus. Other measures to be considered will include support packages for various industries.”

Jonathan Lamb, chief executive of the Entrepreneurs’ Forum, said: “I believe businesses in the North-East will emerge from this current situation stronger and more resilient – as long as they continue working in partnership to overcome the obvious challenges that lie ahead.

“Anything that the government can do to support entrepreneurs and businesses to maintain the UK economy, such as quantitative easing, is to be welcomed.

“Our members are continuing to do everything in their power to protect their business, but this is an unprecedented crisis on such a national and global scale that only governments have the scope and power to be able to intervene.”

Ajay Jagota, chief executive of KIS Group, said: “Cancel the MPC monthly meetings, any action required needs to have agility.

“Offer Interest free loans to SME’s to cover a six-month period – certain criteria could apply but it is imperative government assists SME’s through this tough period.

“There is a fear that only BIG business and banks get protection - a repeat of 2008.

“A Darwinian approach towards SME’s would be catastrophic for the UK economy when it finally recovers from COVID19.”

David Coates, managing director of Newsquest North East, said: “Where to start…Firstly, in these situations often the less you do the better. But I do think that the Bank should consider further quantitative easing, if the markets enter credit crisis levels (FTSE100 sub 3500).

“There’s no scope, really, for further reductions in interest rates, unless the Bank feels to the need to go nuclear with negative rates.

“I do think it is an opportune time for the Government to start funding major infrastructure with borrowing, but they need to be aggressive in pinning the coupon to the lowest level they can get the market to accept – which, in the current climate, will be very low indeed.

“I’d also encourage the Government to create an innovation and investment fund, something without the usual red tape, to get investment in new start-up businesses moving more quickly. Appreciate this isn’t strictly an MPC initiative but the Bank could have a role in the oversight and administration.”

Chris Droogan, Managing Director of Cleveland Bridge, said: “The bank’s response to the Covid-19 emergency has consisted of reducing interest rates very close to zero and providing unlimited loans and support on easy terms. It is hard to think of any further additional helpful action that the Bank could undertake.”