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Interest rate increase further adds to business pressure

Interest rates have been raised to their highest level for 14 years, after the Bank of England raised rates to 4.25% from 4% after inflation rose unexpectedly last month.

David Bharier, Head of Research at the British Chambers of Commerce, said: “The decision to increase the interest rate indicates the Bank are still pursuing strong action following yesterday’s surprise rise in inflation. Record high inflation remains the top issue of concern for SMEs, and it has been wiping out their ability to invest and grow for almost two years now. 

“However, an interest rate rise alone is a blunt instrument that doesn’t address some of the fundamental causes of inflation such as failure in the energy market and global supply chain shocks.  

“The cost-of-living crisis and the cost of doing business crisis are two sides of the same coin and SMEs, like consumers, are getting hit from both rising prices and rising borrowing costs. The only way out of this vicious cycle is through taking action to boost economic growth, through investment in infrastructure, skills, and global trade.” 

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