Content

1. Introduction....................................................................................................1
2. Result.............................................................................................................1
2.1. Result of Questionnaire.........................................................................1
2.2. Result of the Interview..........................................................................1
3. Discussion......................................................................................................2
3.1 True Impact from the Interest Rate........................................................2
3.2 Tendency of the Interest Rate................................................................2
3.3 Influence from the Britains Leaving EU................................................3
3.4 Feeling from Residents..........................................................................4
3.5 Change from the Adjustment.................................................................5
4. Conclusion......................................................................................................5
Reference:..........................................................................................................5

1. Introduction
The investigation has been conducted successfully. There were 30 replies after
the email was sent. Also, 4 people had been interviewed with the prepared
questions. The data was collected successfully. This section will present the
result from the questionnaire and interview and discuss them after analysis to
draw a conclusion.

2. Result

2.1. Result of Questionnaire

This section will show the data from the questionnaires.
Table 1, Result of Questionnaire
A
B
C
D
1
18
12
0
2
1
8
17
3
3
4
9
3
14
4
5
12
7
5
6
6
2
14
12
2
7
5
7
13
5
8
13
17
9
16
10
4
10
3
11
13
3
11
14
8
13
8
12
12
3
4
9

E
1
0
2

In terms of the third question, only five of the responders are working in the
field of finance. There are seven students among them and dont have salary.
Two responders do not have a job currently. Others are working on the
different positions in society.
In terms of the 10th question, most of the responders think that the
adjustment of interest will influence the daily life in some degree. Nearly 50
percent of responders think that the influence will be mainly on the aspect of
eating and consumption level. 60 percent of responders think that the aspect
of living will be influenced and most of those responders think that the
influence will be evident. Only 10 percent of responders choose working as
the aspect of life which will be influenced. In terms of the consumption idea,
only 15 percent of responders choose this option but most of those
responders think the influence will be evident or great.
2.2. Result of the Interview
Four people were interviewed before with the prepared questions and two of
them were financial students. The other two were common residents. All
responders know well about the interest rate and can explain it clearly without
error. In terms of the effect of interest rate, the answers include different
aspects, such as housing, purchasing and provision for the elderly. Nearly all
aspects involved in the daily living are mentioned. For the adjustment of
interest rate since the financial crisis, the answers differ according to the age
and group of the responders. Because the students are not local which is a
defect in this research, they can only have a general answer on this question,
which is hardly reliable here. According to the other two residents, the effect
is shown in the aspect of different types of loans, especially house loans, and
saving. Further discussion on this issue will be in the part of Discussion. For
the changes of UK interest rate, every responder knew well about it so the
detail is not need of showing. In terms of the fifth question, most of the
responders think that the bank interest has been unstable for years which is
not a good phenomenon. And nearly all the responders hope that the
1

adjustment of interest rate in UK in the future does not have high scale. For
the rest of the questions, because they are related with the core part of this
investigation, the answers to them will be discussed in detail in the section of
Discussion.

3. Discussion
In general, the data collected is useful for this research, this section will
principally discuss the information after the analysis of the obtained data to
draw the conclusion.
3.1 True Impact from the Interest Rate
From the answers in the questionnaire, the interest rate does have impact on
different aspects involved in the social life. The direct impact is that the
saving of the residents cannot get more profit in the future, especially for the
money to serve the elderly. It is known that after the global financial crisis the
interest rate had gone low for long period (Controlling interest 2013), and
during that period, the price of the house was low due to the low interest rate
in loan. Although this was a positive news for the residents, the daily
paycheck was also relatively low. Besides, if the interest rate is increased in
the future, no matter how gentle the change is, there will be a burden on
residents as the daily income may not increase for residents (Ana-Maria,
Shelagh & Elena 2008). This explains that why in the questionnaire more
responders hope the interest rate can stay low or remain the same. However,
keeping a low interest rate is never a good phenomenon as it represents the
tendency of the national economy.

Figure 1, Bank of England's Official Bank Rate Since 1951 (Szu & Dan 2015)

3.2 Tendency of the Interest Rate

From news and articles on the Internet, the increasing of the interest rate is
inevitable in England. This is because England has generally recovered from
the financial crisis. The vital point is when the interest rate will increase, and
the time will influence different matters. From the answers to the
questionnaire, currently the residents still do not want the interest rate to go
up. From the answers of the interview, residents think that they have not
finished paying the loans from purchasing the house, and the growth of
interest rate means that they need to pay more. Also, one residents think
that the most serious problem about the British interest rate is that the
growth of interest rate in other nations in Europe Union is not united (Szu &
Dan 2015). Currently Britain has a better recovery compared with the other
nations in Europe Union. If the difference between those interest rate
2

becomes large, there will be opportunities for international business to obtain

profit via interest difference (Ana-Maria, Shelagh & Elena 2008). And this is
just a potential threat of another crisis.
However, the tendency will not change along with the recovery of British
economy. The rate of decreasing has gone low and residents can get the clue
of increasing in the difference. Most of the responders in the investigation of
questionnaire have estimated that the impact of the Interest Rates increasing
will be mainly on the living, especially the housing. The housing price will
definitely increase along with the interest rate, and residents may have more
difficulty in paying the loans (Larry 2015).. However, as the increasing speed
of British economy has decreased, the market predicts that the increase of
British interest rate may come later.

Figure 2, Interest Rate in previous 10 years (Larry 2015)

3.3 Influence from the Britains Leaving EU

The United Kingdoms leaving Europe Union is still in argument and is waiting
for vote. However, the world has been considering the influence from this
event (Ana-Maria, Shelagh & Elena 2008), including the interest rate of
Britain. Although the investigation did not include this topic, which should be
regarded as a drawback, it is worthwhile to discuss the influence from the
Britains leaving Europe Union on the British interest rate, and the further
corresponding influence on the society (Szu & Dan 2015). Currently the speed
of recovery in economy is slow but the interest rate has not been raised. If UK
really leaves the Europe Union, the growth of economy may stop or even
transformed to decline, because the international connection between Britain
and other countries has to be re-determined (Larry 2015). In this way,
lowering the interest rate may be chosen by the British central bank versus
the decline of the economy. Even the bank wants to increase the interest rate
in order to enhance its competitive strength in the market, the power of
pound sterling may decrease due to the leaving and the price of importing
goods will defiantly increase, which will lie burden and pressure on the
increasing of interest rate.
3

Figure 3, Whether UK leaves EU (Paul 2015)

3.4 Feeling from Residents

The tendency of the interest rate is increasing, which has been agreed by
most of the responders in the investigation of the questionnaire. However, the
first thought from the responders is not the positive factors in living, but the
issues in housing and other staff related with consumption, which indicates
that the residents may not be ready for the rising of living cost. That is mainly
why the interest rate currently has not been raised by the banks in Britain
during the recovery since the crisis (Tejvan 2011), as time is needed for the
public to buffer the decreased interest rate previously. Moreover, some
responders have pointed out the influence on the aspect of consumption
level, which means residents are still worried about having not enough money
for daily consumption. However, the issue of inflation has been considered by
the England banks as initially the governor of the Bank of England had
decided to gradually increase the interest rate in small scale and it will last to
a certain point, which is just in order to against the possible inflation elicited
by the increase of the British interest rate. Besides, the consumption level
represents the level of the residents income. Since the responders in the
questionnaire investigation have chosen the influence may mainly on the
level of consumption, and the people interviewed during the investigation all
pointed out the impact of adjusting the interest rate will mainly on the
consumption (Tejvan 2011), the growth of the income is still not enough for
residents to shop freely. However, if the residents save more money in the
bank due to the increase of British interest rate, it is positive for banks to
increase their competitive strength. From the answers in the interview, the
advantage that the adjustment of interest rate can bring is to reveal the
situation of the current economy and let residents save more money for the
future. But in terms of the feeling of the adjustment of interest rate, the
answer is still negative, representing that the remaining production in the
society is still under processing.
3.5 Change from the Adjustment
The last question in the interview is about the change brought by the
adjustment of British Interest Rate. One financial student has pointed out the
4

decrease of the house price. Surely, the price of housing has increased rapidly
due to multiple factors, including the lack of house resources and the low
interest rate (Larry 2015). Increasing or just adjusting the interest rate can
lower the speed of increasing in house price as it is nearly out of control.
Besides, one resident has said that he will save more money Instead of buying
financial product for more profit. This is positive for the British economy since
financial product always contains high risk. Because of the low interest rate in
British banks, more and more residents have put their money in buying
financial products, which bring large potential risk in the whole British
economy. The adjustment can control the risk of the economy.

4. Conclusion
This research is aimed to discover the impact of the adjustment of interest
rate by the Bank of England via the investigation on the residents. Although
there are some drawbacks on the research method and the content in the
questionnaire and interview, this research still bring information directly from
residents and show the impact and estimation of the adjustment. Although
the tendency is that the British interest rate will increase, most residents still
hopes that it can be remain stable, which means the residents think that it is
not the right time to adjust the interest rate for the Bank of England.
Due to the limitation of the scale of the research, the sample is not big
enough to get sufficient information from the residents. Therefore, it is
recommended for the further researchers to enlarge the scale of the sample
and change direction to investigate the remaining production of the society to
discover whether it is time increasing the interest rate.

Reference:
1. Controlling interest, 2013, University of Cambridge, viewed 14 th April 2016,
<
http://www.economist.com/news/schools-brief/21586527-third-our-seriesarticles-financial-crisis-looks-unconventional>
2. Tejvan P., 2011, How the Bank of England Set Interest Rates, Economics,
viewed 14th April 2016, < http://www.economicshelp.org/blog/2597/interestrates/how-the-bank-of-england-set-interest-rates/>.
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governor,
the
guardian,
viewed
14th
April
2016,
<
http://www.theguardian.com/business/2015/jul/16/uk-interest-rate-rise-newyear>.
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Bank of England Governor Mark Carney, viewed 14th April 2016, <
http://www.telegraph.co.uk/finance/mark-carney/11744779/Interest-ratescould-rise-as-soon-as-January-says-Bank-of-England-Governor-MarkCarney.html>.
5. Ana-Maria F., Shelagh H. & Elena K., 2008, How do UK Banks React to
Changing Central Bank Rates?, Cass Business School, viewed 14th April 2016,
https://www.cass.city.ac.uk/__data/assets/pdf_file/0003/79158/NonlinearUK_fu
ertes08.pdf
6. Joseph N., 2014, 5 Reports That Affect The British Pound, Investopedia,
viewed 14th April 2016, < http://www.investopedia.com/articles/forex/11/fivereports-affect-the-pound.asp>.
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Conservative
Home,
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