Commenting on the Bank of England’s decision today (2 February) to raise the base rate from 3.5% to 4%, East Midlands Chamber chief executive Scott Knowles said: “The Bank’s decision to raise interest rates for a 10th consecutive time continues its approach to reduce inflation, but this is not without serious side-effects.
“Those impacted most by today’s decision will be mortgage holders and businesses reliant on lending.
“Our research shows that while inflation remains by far and away the biggest concern for East Midlands businesses, with 77% citing this in our latest Quarterly Economic Survey for Q4 2022, concern about interest rates has risen sharply – with 37% now saying it is an issue.
“Businesses are being hit from all sides, leading to the risk of future price rises – with 58% of our region’s firms expecting they will be forced to increase their prices over the coming year – and declining investment intentions.
“The main driver of inflation for most businesses is energy costs and while the Government’s recent announcement of a new Energy Bills Discount Scheme provides certainty for the next two years, scaling back the level of support means companies will be squeezed further.
“With a Budget around the corner, this provides Westminster with an opportunity to address the various concerns felt by firms by getting the basics right and promote growth via the ‘four Is’ outlined in our Business Manifesto for Growth – investment, innovation, infrastructure and international trade.