As widely expected, the Bank of England has raised the interest rate by a quarter of a percent to 5.25%.
The rise in the interest rate comes as no shock, and we believe we are past the peak in inflation, but at 7.9% it is almost four times the Bank of England’s 2% target. However, the Government has pledged to reduce inflation to 5% by the end of 2023.
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.
Vicky Pryce, of the British Chambers of Commerce (BCC) Economic Advisory Council, said that “Businesses will be 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”.
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 are concerns now 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.
We are really pleased that Vicky Pryce will be the headline speaker at our forthcoming ‘Economic Conference’ on Wednesday 22nd November.
The conference will focus on what the business community may expect to see in 2024. In addition to Vicky there will be other speakers and a programme of panel discussions. We will confirm the venue and booking details in the next few weeks so save the date in your diaries.
If you have any questions or issues around the latest interest rate rise or any business issues, contact our policy advisor Declan Riddell: declan.ridell@staffordshirechambers.co.uk
Chamber welcomes its latest patron.
Earlier this week I was delighted to welcome international construction company, Swietelsky as our latest patron.
The Swietelsky Group is a leading construction company operating in Central and Eastern Europe with around 12,000 employees. The firm is proud of its ‘big family’ philosophy, nurturing a supportive and collaborative environment to help drive toward a common economic future. They offer a full range of construction services and are known for their high quality, flexibility and adherence to deadlines.
As a patron of Staffordshire Chambers, Swietelsky joins a vibrant community of businesses who are dedicated to promoting economic growth and supporting the development of local enterprises.
Becoming a patron of the Staffordshire Chambers of Commerce identifies a business as a leading and strategic player in the Staffordshire economy. We provide our patrons regular access to key influencers and decision-makers in government and other agencies ensuring that they are well placed to influence and make the optimum contribution to growing our economy.
Patron’s support and expertise is priceless. Personnel from all our 27 patrons populate our Board of Directors, Council and our member forums. They give freely of their time to offer their expertise which covers every aspect of business, education and skills and make a huge contribution to local good causes and charities through their corporate social responsibility activity.
If you would like to find out more about becoming a patron contact Karena Pawlak karena@stafforsirechambers.co.uk or call 01782 202222
If you want to talk to us about any business issues, including funding, you can call our switchboard on 01782 202222, call the Business Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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