Peston: ‘rate rise a disaster for many’

BBC News business editor Robert Peston
BBC News business editor Robert Peston
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A rapid rise in UK interest rates would be a disaster, plunging millions into a misery of personal debt.

Award-winning BBC journalist Robert Peston warned the YIBC that, despite green shoots in the economy and a ‘remarkable’ rise in employment figures, there would be dire consequences if there was too swift a hike.

“As we went into the recession our debt was at record levels. The weight of it is still bearing down on us. If rates went up to 1990s levels, many would face severe financial problems,” the widely-respected BBC News business editor warned.

“Our economy is growing faster than in any other rich developed country but people will not feel significantly better off for some time because productivity has fallen and that means companies cannot increase wages, which causes a stagnant standard of living.

“Major issues I see are that the too-big-to-save banks are still with us and we are still putting an enormous amount of trust in regulators to keep up with what the banks are doing.”

Peston, who had Sheffield City Region commerce and industry representatives in his thrall, also lambasted the Eurozone. It was, he said, “on symptom-suppressing painkillers from the Central Bank.”

He saw big change for China, predicting “the end of the miracle” due to its banks having lent $15 trillion in the last eight years.

“But if China rebalances properly there will be huge opportunities for UK exporters,” he rallied.

There was further optimism at the end of his speech: “We need to address key issues; the UK still has too much debt, we are no longer self-sufficient in energy and our young people are lacking in world-class skills,” he said.

“I think we have three or four years of work ahead. But don’t tell anyone... I am more optimistic than I have been in years.”