INFLATION should fall sharply early next year and lending margins will reduce, easing pressure on businesses.
That is the view of Bank of England Monetary Policy Committee member Ben Broadbent, who visited the region this week to gauge the views of businesses and explain Bank policy.
Mr Broadbent told LDP Business that “temporary factors” such as the VAT rise and energy price increases account for 2% of the current 5.2% inflation figure and once they feed through he sees inflation levels declining.
“The headline rate will fall back pretty sharply, especially as we get to the new year and VAT rates fall out of comparisons.
“Inflation will fall in the first part of the next year.”
He is also optimistic that problems in the Euro Zone will be tackled which will relieve pressure on the supply of retail credit throughout UK banks.”
He added: “Margins in lending will come down and allow business conditions to improve.”
