The Chief Executive of the East Midlands Chamber has commented on the Bank of England’s decision to raise interest rates from 2.25% to 3%.
Scott Knowles said: “The largest single increase in interest rates is a clear signal yet by the Bank of England that businesses should expect a high interest rate environment for the foreseeable future.
“This will inevitably hamper investment intentions, which are already lagging significantly due to the low confidence affecting many firms right now amid a cost-of-doing-business crisis not helped by a lack of certainty.
“Many businesses at this time of year are entering their business planning cycle for the next financial year and the lack of clarity on energy costs from 1 April 2023, among other inflationary pressures such as rising interest rates, will protract or even cancel planned investment in some cases.
“Our latest Quarterly Economic Survey showed confidence over profitability and turnover has fallen by 21% and 17% between the second and third quarters of this year, with investment intentions dropping by 6% for both people and plant and machinery.
“We understand the need to address rampant inflation, but equally the constant cycle of rates rises means these trends are unlikely to improve anytime soon unless the Government gets serious about supporting business with mountain concerns.
“Later this month, we will launch a Business Manifesto for Growth in the East Midlands and Beyond in Parliament that urges decision-makers to ‘get the basics right’. This means developing a long-term approach to business taxation and regulation, improving digital and physical connectivity, and backing firms to invest in people.
“By addressing the underlying structural issues that are holding many firms back, they can eventually get on with doing with what they do best – which is creating growth, job opportunities and wealth in their local areas, and driving the national economy forward.”