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13 Jul 2023

Impact of rising interest rates still unclear as economy flatlines, says Chamber

Commenting on the latest figures from the Office for National Statistics (ONS) showing 0.1% decline in UK GDP for the three months to May 2023, East Midlands Chamber chief executive Scott Knowles said: “This data provides further evidence of the delicate state of the UK economy. While businesses have been incredibly resilient in stomaching multiple waves of economic crises to stave off the widely-forecast recession until this point, they still face numerous cost challenges.

“While our latest Quarterly Economic Survey suggests East Midlands firms may be bucking the national trend, with improvements sales activity, cashflow and pricing expectations, it also demonstrated how caution is needed due to a decline in advanced orders, future recruitment and investment intentions.

“Despite a stabilisation in the policy environment, businesses continue to operate in a climate with a high degree of uncertainty. Although slightly fewer businesses are reporting inflationary pressures, the growth in interest rates is rising as a concern and we don’t yet know the full impact this will have on firms that are borrowing.

“It’s crucial that Government and Bank of England policy both need to be very responsive to economic developments. In particular, this means creating an environment in which businesses have confidence and backing to invest in order to create meaningful, long-term economic growth.

“To this end, we have urged policymakers to focus on what we call the ‘four Is’ – investment, innovation, infrastructure and international trade – in our regional economic blueprint, titled A Centre of Trading Excellence: A Business Manifesto for Growth in the East Midlands and Beyond.”