The British Chambers of Commerce has welcomed the Bank of England’s decision to cut interest rates from 5.25% to 5%, the first drop since the onset of the pandemic in March 2020.
The Bank’s rate setting committee voted by a majority of five to four to reduce the rate.
David Bharier, Head of Research at the British Chambers of Commerce, said: “The decision by the Bank to cut the interest rate gives many smaller firms welcome breathing space and could trigger an increase in investment as borrowing costs decline.
“This cut, the first since 2020, became inevitable as inflation has settled at around 2% over recent months. Our economic forecast expected this cut, as well as a further reduction by December, bringing the interest rate to 4.75% by the end of the year.
“The Bank will be monitoring events closely as global conflicts and trade tensions could still exert price pressures on commodities and the finely balanced 5-4 voting split shows this caution. For UK SMEs, our research shows that inflation remains a top issue for them, albeit down on the peak of concern in 2022.
“A cautious and well-communicated approach from the Bank will support business confidence, which has been steadily increasing in recent months.
“As the Chancellor begins to prepare her Autumn budget, we want to work in partnership with government to unlock the investment needed to boost economic growth.”
Join Somerset Chamber of Commerce to give your business a stronger voice both locally, regionally and nationally. Combined with local town chambers, we represent over 2,000 businesses across Somerset with a direct line to policy-makers at all levels.
