Business Hoping for End to Rate Rises

03 Aug 2023

Published in: Black Country Chamber of Commerce News

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Sarah Moorhouse reacts to the Bank of England's decision to raise the base rate to 5.25%

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Reacting to the Bank of England's decision to raise the base rate to 5.25%, Black Country Chamber's Chief Executive Sarah Moorhouse said: 

“Another interest rate hike and another sucker punch that will leave businesses hoping that this rise in interest rates is the last they will see.

“While inflation remains the top concern for businesses overall, interest rates have emerged as the second top concern, with 41% citing this as more of a worry than three months ago in the British Chamber’s latest survey.

“We can be sure our members, employing over 65,000 in the Black Country, see this as a real danger that the economy could be pushed into recession as it takes some months for changes in interest rate rises to filter through and that they thoroughly understand the critical role they can play in supporting employees in the current climate.

“Whilst our job here at the Chamber must be to continue to support those businesses and watch closely for any further indications on the banks plans and share any assistance when we can”.

Vicky Pryce, BCC Economic Advisory Council member, said:

“Businesses across the UK will be fervently hoping that today’s rise in interest rates is the last they will see.

“While many firms will have already factored this increase into their plans, it is clear from the recent rise in insolvencies that the economic environment is becoming stacked against smaller firms. They are the ones with less cash reserves in the bank and greater exposure to finance.

“Yet data from the Office for National Statistics clearly shows that input cost pressures for firms are finally falling. And recent BCC research backs this up with 45% of companies now expecting to increase prices, a 15-percentage point fall compared to six months ago.

“We are also likely to see a further substantial fall in inflation in July as last year’s energy price rises drop out of the data.

“While inflation remains the top concern for businesses overall, interest rates have emerged as the second top concern, with 41% citing this as more of a worry than three months ago in the BCC’s latest survey.

“And there is now a real danger that the economy could be pushed into recession as it takes 18 months for changes in interest rate rises to filter through. With all the cumulative pressure of past rises yet to come, business will be watching closely for any further indications on the Bank’s plans.

“At the same time, it is encouraging that the Government has recently expanded the list of shortage occupations to recruit more workers from abroad. Hopefully it will now be considering what more can be done to ease staff pressures.”