THE Bank of England’s 0.25% interest rate rise will
deter consumers from “big ticket” purchases such as cars, electronic equipment
and holidays, according to a leading economist.
Lloyds TSB financial markets chief
economist Trevor Williams claimed the latest increase would unnerve consumers
because it is the first successive monthly rate rise in four years.
“There are a certain number of purchases consumers
will tend to put off if they don’t feel confident about the economy, and travel
is top of that list.”
“People will be reluctant to make those impromptu
purchases, such as last-minute breaks, because they may be uncertain about how
much spare cash they have or whether their job is secure.”
Williams said rates should remain steady until August,
but warned they could rise to around 5.5% as the Bank attempts to slow down the
economy.
Geddes Travel owner David Geddes agreed holidays could
suffer.
“It’s just another dent in people’s pockets. With
increasing fuel prices, any rise in interest rates is going to eat into
people’s spare cash, so it may put them off those larger purchases.
He added: “The market is suffering anyway, it’s like
someone has switched the light off for June.”
However, Thomas Cook director of trade relations Ian
Derbyshire said this season should escape.
“Any increase in interest rates doesn’t help in terms
of consumers’ decisions to purchase big ticket items,” he said. “However, if
individuals have already made their mind up to travel this summer I don’t think
the rise will put them off.”