BusinessCompany NewsITEM Club warns of ‘choking’ interest rates

ITEM Club warns of 'choking' interest rates

The ITEM Club, the economic forecasting group sponsored by Ernst & Young, has warned that the Bank of England could 'choke the life' out of the economy if it continues to raise interest rates.

Link: ICAEW: Interest rate rise threatens SMEs

The group’s latest report described the Monetary Policy Committee’s quarter-point rise earlier this month – its first in nearly four years – as premature.

Peter Spencer, economic adviser to the ITEM Club, said: ‘The risk is that in tightening the monetary policy screw too early the MPC will choke the life out of the fragile economic recovery.’

The report warned specifically against a further increase in December, when it said consumer confidence was ‘critical’ for the retail and property markets. A rise might prove the trigger to push the consumer into serious retrenchment and the economy back into stagnation, it concluded.

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