East Midlands Chamber has cautiously welcomed the Bank of England’s 0.25% cut in the interest rate to 4.25% but warned that higher costs for businesses and price pressure persist.
Director of Policy and Insight Richard Blackmore said: “Businesses looking to borrow will benefit from this lower interest rate, but when you take into account the sheer weight of cost challenges businesses face right now – inflation still above the government’s 2% target, staffing now more expensive due to higher employer National Insurance contributions that kicked in last month and higher National Living Wage, trading conditions are still tough.
“Our Quarterly Economic Survey showed half of East Midlands businesses expect having to raise their prices, a figure that rose significantly since last summer, with labour costs the biggest driver. Confidence is a real low with 4 out of 10 businesses reporting that they anticipate profitability to worsen over the next 12 months.
“The government’s comprehensive spending review is only a month away and businesses will be keen to hear how they’ll be supported over the coming months.”
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