With CPI inflation stubbornly higher than forecast at 8.7%, it is no surprise that the Bank of England have increased the interest rate by a half of a percentage point to 5%.
However, 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 need clarity on the direction of further changes as a matter of urgency.
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.
The British Chambers of Commerce (BCC) has been urging the Government to act on these issues for over a year and is ready to work in partnership with it to ease labour shortages and reduce trade barriers.
High inflation, high interest rates and slow growth will be a lethal combination for many and a solution beyond continuing to raise the base rate needs to be found.
Vicky Pryce BCC Economic Advisory Council member, and speaker at our first ever Economic Conference in November said: “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.”
We are here to listen your concerns around inflation and interest rates and how they are affecting your business. Your input helps greatly with our representations to the government. You can contact our policy adviser, Declan Riddell declan.riddell@staffordshirechambers.co.uk.
Armed Forces Week
This week is Armed Forces Week, an opportunity to show our support for the men and women who make up the armed forces community from currently serving troops to service families, veterans, and cadets and the role they play protecting the UK both at home and overseas.
Armed forces personnel, veterans and their families make an enormous contribution to Staffordshire’s economy and society. As a county we have a strong connection with the armed forces, with large bases in Stafford and Lichfield, along with many veterans, reservists, cadets, and armed forces families across the county.
At Staffordshire Chambers we have our very own Honorary Colonel of the British Army, in ex-Chamber President Mike Frewer, and we are also extremely proud to have West Midlands Reserve Forces & Cadet Association (WMRFCA) as patrons and proud that the Chambers support to our armed forces has been recognised through our Silver Award and by being a signatory to, the Armed Forces Covenant – a promise to ensure that those who serve or who have served in the armed forces, and their families, are treated fairly.
On Wednesday we hosted a special event at the Shire Hall, in conjunction with Staffordshire County Council to promote and inform businesses about the Covenant, highlighting the skills and invaluable contribution former service personnel and their families can bring to our businesses and wider economy in Staffordshire.
Several businesses who attended will be signing the Covenant joining many more businesses who are already signed up. To find out more about the Armed forces Covenant and how you can get involved click here: Armed Forces Covenant: guidance and support – GOV.UK (www.gov.uk)
If you want to talk to us about any business issues, including funding, you can call our switchboard on 01782 202222 or call the Stoke and Staffs Growth Hub Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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