The Bank of England has held interest rates at 5.25% but said it would wait for firm evidence that inflation was under control before cutting them.
David Bharier, Head of Research at the British Chambers of Commerce, said: “Today’s decision to hold the interest rate at 5.25%, the same level since August last year, will give some respite for businesses. However, the current level is still a source of concern for SMEs.
“Our surveys have showed that around four in ten SMEs say they are directly negatively impacted by the current rate, mainly through higher borrowing costs. Smaller firms and those in sectors such as hospitality and retail are disproportionately impacted.
“The Bank has outlined that inflation is likely to remain volatile for the foreseeable future. Alongside this, UK firms face significant uncertainties with geopolitical conflicts, new trade barriers with the EU, and ongoing skills shortages. The Red Sea crisis has already seen spikes in shipping container and insurance costs which could feed into a renewed wave of inflation.
“With a General Election fast approaching, political parties will need to set out a clear plan for the economy. The BCC is setting out it’s priorities for the next Government across a series of reports, starting with ‘Green Innovation Challenge’ report, released this week.”
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