Business Seeking Certainty On Interest Rates

22 Jun 2023

Published in: Black Country Chamber of Commerce News

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While inflation is still the top concern for businesses, interest rate rises are now causing worry for a rapidly growing number of firms with soaring borrowing costs

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Reacting to the Bank of England decision to raise the base rate to 5%, Black Country Chamber's chief executive, Sarah Moorhouse, said:

“While inflation is still the top concern for businesses, interest rate rises are now causing worry for a rapidly growing number of firms with soaring borrowing costs. Businesses will need clarity on the direction of further changes.

“There are several drivers of inflation which could be eased by a policy response. For instance, unprecedented tightness in the labour market is causing firms to bid up salaries, and trade barriers with the EU are driving up costs.

“High inflation, high interest rates and slow growth will be a lethal combination for many. Fundamentally, solutions need to be found beyond the interest rate lever.”

The British Chambers of Commerce (BCC) and network have been urging the Government to act on these issues for over a year and are ready to work in partnership with it to ease labour shortages and reduce trade barriers.

Vicky Pryce, BCC's Economic Advisory Council member, added:

“There should be absolutely no need to drive the economy into recession in a bid to deal with rising prices.

“There are already signs that the input cost pressures on firms are waning with PPI dropping by 1.5% since April. And although core inflation remains stubborn this does not prevent the overall CPI rate from falling.

“Against this background the Bank must give clear signals on interest rates and commit to cutting them quickly as inflation slows.

“There is a fine balancing act to be struck. Push too hard on interest rates and there is a real danger that more businesses will be driven to the wall, impacting the long-term outlook for economic growth and prosperity.”

More details on the Bank of England decision can be found: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/june-2023 

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To learn more about how the Black Country Chamber can support your business, offer guidance and connect you with the right people, get in touch with our team via website@blackcountrychamber.co.uk or call us on 0330 020 0820 (lines are open Monday - Friday 9am until 5pm).