The Bank of England has cut interest rates to 4%, in line with market expectations.
The Monetary Policy Committee (MPC), which sets monetary policy to meet the 2% inflation target, has voted by a majority of 5 to 4 to reduce Bank Rate by 0.25 percentage points, rather than maintaining it at 4.25%.
East Midlands Chamber director of policy and insight, Richard Blackmore reacted: “With the extent of challenges firms face every day – staffing costs up due to higher National Insurance contributions, the National Living Wage also up while inflation remains well above the government’s 2% target – a lower interest rate will do little to alleviate tough trading conditions.
“For businesses looking to borrow, the 0.25% cut in interest will be welcome but that’s only one obstacle eased within a very difficult climate. For nearly a third of East Midlands firms to have said in our Quarterly Economic Survey they expect their profitability to worsen in the months ahead and 4 out of 10 anticipating having to push their prices up, you can see just how fragile confidence is.
“While we’ve seen some recent welcome steps from the government, addressing things like late supplier payment in their recent strategy for small businesses, the concerns raised throughout our survey – corporate taxation and inflation top the list – clearly indicate that much greater support is needed for firms.
“Growth is not enabled by making trade harder and with the Autumn Budget fast approaching firms need assurance they are not going to be hit with tax hikes.”
