The Chief Executive of the East Midlands Chamber has responded to the announcement from the Bank of England that interest rates will increase from 0.5% to 0.75%.
Scott Knowles said: “While another rise in interest rates has been expected since the previous increase in December, this latest announcement comes at a difficult time given all the pressures squeezing margins on businesses right now.
“Against a backdrop of growing domestic and global headwinds including Russia’s invasion of Ukraine, it will be viewed by many as a further step in a prolonged period of aggressive monetary tightening at a time when consumers and businesses are struggling under a myriad of rising cost pressures.
“Our latest Quarterly Economic Survey for Q1 2022 shows 80% of East Midlands companies expect prices to go up across resources such as staff, raw materials and energy over the next three months, leading to a very real cost of doing business crisis.
“Cashflow went into negative territory for three out of 10 of our region’s organisations at the beginning of this year and raising interest rates will be another deterrent to future investment – which ultimately is what enables businesses to improve productivity in order to create growth, jobs and wealth in their communities.
“It’s important that the focus should be on using next week’s Spring Statement to tackle this escalating crisis by delaying the national insurance rise and introducing a temporary energy price cap for small businesses.
“This would give firms the headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”