FEARS have been raised about a potential increase in insolvencies this year as business leaders argued against an interest rate rise.

The Yorkshire Shadow Monetary Policy Committee (MPC) unanimously voted to hold interest rates this month, with members voicing concerns about inflation, supply chain issues, recruitment and wage pressures

The MPC is a partnership between Clive Owen LLP and The Press, which considers the state of the region’s economy and gives experts from different sectors the opportunity to argue their case for a shift, or hold, in the rate.

Rob Whitehead, of Clive Owen LLP, said businesses were suffering from inflationary pressures with supply chain costs, purchases and overheads all going up.

“Whether now’s the time to be starting to increase interest rates, I am not 100 percent sure on that, although it would definitely send a signal to the market.”

Steve Lowe, of Newquest LOCALiQ, said: “We have to encourage people to continue to feel confident in spending where they can and a move to put interest rates up might put the blockers on people spending.”

Richard Peak, of property firm Helmsley Group, said they were seeing massive pressure on build costs. "We’ve got borrowers, who we lend money to, and also on our own projects, where for certain types of materials, they can be up 35 to 40 percent from where they were.”

Gary Smith, of Tilney, said: “We could start to see an increase in redundancies as the furlough scheme comes to an end, which could temper spending and businesses that potentially would have failed without Government support may fail and again that may lead to a slowdown in the economy.”

David Broadbent, of Begbies Traynor, feared an increase in insolvencies towards the end of the year.

“People have been very reliant on the funds that have been readily available in the last 18 months. However, people haven’t been in a position where they’ve had to pay anything back so any slight increase in interest rates just will not help because people will be desperate to borrow in the next six months.”

Gill Gitsham, of GSM, said: “We are in manufacturing, and we’re really hit with issues with the supply chain; we’ve had to overstock to take advantage of price rates to try to bring the cost of our raw materials down.”

She said they were competing against the hospitality sector when recruiting, leading to them 'having to pay a higher and higher wages bill'.

Chris Greenall, of PIB Insurance Brokers, said: “We act for quite an eclectic range of clients and the effect of cost-push inflation is having a massive effect upon businesses and I think increasing the interest rate would have a harmful effect upon those businesses.”

Bob Gammie, of York Business School, said: “We need confidence in the economy and an increase in interest rates would impact on that.”