Peoples chief Gilda urges Bank to keep hand brake on rates

THE Bank of England must resist pressure to increase interest rates in order to keep the economic recovery on track, according to a senior Scottish businessman.

Brian Gilda, founder and chairman of the Peoples Ford dealership chain, said retailers needed lending rates to be kept low, despite the benefits a higher rate would bring to savers.

His comments came as accounts filed at Companies House showed that Peoples' headcount had fallen from 425 to 384 in the year to 31 July as the company cut costs.

The wage bill for the group - which operates six showrooms in Edinburgh, Falkirk, Livingston and in the Liverpool area - fell from 10.5 million to 9.8m. Administrative expenses were slashed from 6.3m to 4.9m.

Pre-tax profits before preference share dividends doubled to 3m - as revealed by The Scotsman in November - with turnover rising by 6.3 per cent to 141m, boosted by rising used-car prices. Profits were also helped by the UK government's scrappage scheme, which ended on 31 March, 2010.

Commenting on current trading, Gilda said: "We always knew this year was going to be tough after the end of the scrappage scheme and that our numbers would be down. But we've remained in line with our forecasts and we've had a good March, which is still a key month when a lot of customers buy their cars."

The highest paid director, likely to be Gilda, earned 274,895 in 2010 against 263,358 in 2009. They also received a dividend of 297,328.

Gilda said the inflationary pressures being felt by the economy were from external sources - such as rising food and oil prices - and so the Bank of England's monetary policy committee should keep interest rates on hold when it meets next week.

He said: "We know interest rates will have to go back up eventually but it should be when the economy has recovered enough to cope with a rise."