3.75% interest rate hold offers stability but little relief for firms looking for a better rate to borrow

Scott Knowles (Credit: East Midlands Chamber)

The East Midlands Chamber has said the Bank of England’s decision to keep the interest rate unchanged at 3.75% gives predictability to business but will frustrate those looking to borrow at a lower level.

East Midlands Chamber Chief Executive Scott Knowles said: “Keeping a steady ship amid an uncertain economic climate by not moving the interest rate yet seems a logical decision, especially with the ongoing Middle East conflict, but will be a frustration for firms looking to borrow at a better rate so they can invest to grow.

“Joint research we conducted recently with three other chambers of commerce regarding the impact of the Middle East conflict showed 8 out of 10 businesses across the Midlands region have seen higher costs as a result of the war, while in the East Midlands our Quarterly Economic Survey has shown hesitant investment and concern over high costs.

“Slightly eased inflation to 2.6% in June is an encouraging sign but is still above the Bank of England’s 2% target with further hikes this year driven by energy costs possible.

“The Prime Minister’s recent announcement of a 20% cut on business rates for pubs and clubs was a welcome forward step for that corner of hospitality but a full root and branch review is needed, alongside other measures outlined in our Framework for Growth, such as expanding energy support packages for business.

“With the economic climate still in a period of uncertainty, actioning such measures would alleviate tough trading conditions and help incentivise business to invest.”