Commenting on the latest figures from the Office for National Statistics (ONS) showing Consumer Price Index inflation remained at 8.7% in the year to May 2023, East Midlands Chamber chief executive Scott Knowles said: “With inflation remaining stubbornly higher than forecast, it’s never been more important for Government to look at how it can support businesses to drive sustained growth in the economy.
“Raising interest rates is a blunt tool that only focuses on reducing demand, but the real issues lie with raising productivity.
“Our own research shows that while business confidence is returning amid a relatively stable policy environment compared to what we experienced last year, this isn’t translating into some companies investing in their own operations – with our Quarterly Economic Survey for Q2 2023 showing investment intentions for both plant and machinery, and training people, are each down by 3% compared to the previous quarter.
“Both these trends need to be reversed if we are to raise capacity and therefore productivity, which would mean high demand can be met with sufficient supply of products and services to then bring prices, and thus inflation, down.
“To this end, Government must help businesses by focusing on what we call the ‘four Is’ in our East Midlands Business Manifesto for Growth, A Centre of Trading Excellence – investment, innovation, infrastructure and international trade.
“Action in these areas should involve helping with the tight labour market by incentivising firms to upskill their people and making it easier to recruit skilled workers from overseas, more financial support for research and development in key sectors, and cutting red tape that continues to hinder exports.”