Timely action should ease inflation

Oct 14 2008 by Peter McCusker, The Journal

ACROSS the globe, governments are taking decisive action to avert a banking crisis and inject confidence into the economy.

The CBI has applauded the UK Government, not only for the measures announced last week to strengthen the British banking system and help give financial stability to the country, but also for the cut in interest rates.

This was an essential and timely cut for which the CBI had called to help restore business and consumer confidence.

We have now seen major steps by both the Government and the Bank of England to support the economy and the financial system. These will be welcomed by business, and will help the economy at a critical time.

The CBI also welcomed the co-ordinated interest rate cuts by central banks, which will benefit the global economy and stabilise financial markets.

And a significant condition of the deal announced yesterday for some of the UK’s biggest high street banks was that the banks will maintain lending to small and medium-sized companies, and for mortgages, at the levels of last year, which is good news for business and individuals.

It is an important step to help get the economy moving again.

We still hear mixed messages from business in the region. Some sectors, including anything linked to construction, are facing tough times.

In manufacturing we are starting to see the negative impact of rising energy costs and commodity prices.

But on a positive note, CBI’s latest forecast suggests we may have seen the worst of this inflation; and as a region we are fortunate in having a manufacturing base that has seen tougher times in the past and is capable of seeing out the storm.

And some sectors of manufacturing and engineering, such as the offshore sector, are growing and investing.

With the latest Government announcements and the interest rate cut we should begin to see a trickle down into our business community. For the North East to see out this period of uncertainty it is really important that we continue to take a long-term view and invest in our firms and people so we’re in good form for when the upturn comes.

Accolades such as the Fastest 50, and the forthcoming Journal-sponsored North East Business Executive of the Year Awards have an even more important role to play in this climate as they are public recognition and an important reminder that there are many companies which are continuing to grow through these uncertain times.

Liz Mayes, assistant regional director, CBI North East