Shropshire Star

Interest rate rise sparks concerns from Shropshire business chiefs

The Bank of England’s latest interest rate rise comes with ‘potentially serious side effects’ for the economy, Shropshire Chamber of Commerce fears.

Last updated
Ruth Ross, from Shropshire Chamber of Commerce

Businesses which are relying on debt to keep afloat after three years of turbulent times will be disproportionately impacted by the decision, according to deputy chief executive Ruth Ross.

“Mortgage holders will, of course, also be concerned by the hard-line approach which the Bank is taking to tackling inflation,” she said.

“Shropshire businesses will also need to see concrete action in the upcoming Budget to promote growth, including plans on infrastructure, tax, skills, and trade.”

David Bharier, head of research at the British Chambers of Commerce, added: “Our research shows that while inflation remains by far and away the top concern for businesses with 80% citing this in Q4 2022, concern about interest rates has risen sharply with 43% saying it is an issue.

“With the Bank expecting inflation to slow to around 4% by the end of the year, further rate rises could now simply add to the risk of a deeper recession, outweighing the benefits.

“The main driver of inflation for most firms is energy costs, but this requires a clear policy solution, with immediate relief for those most affected and longer-term structural changes to ensure this market failure does not occur again.”

Andrew Megson, CEO of My Pension Expert, said: “Another jump in interest rates, now to a 15-year high, would be great news for pension planners in times of stability – but we’re not in those times. The base rate is still less than half the rate of inflation, meaning people’s savings are losing value in real terms.

“Living costs are continuing to rise and this is placing relentless pressure on retirement plans. My Pension Expert’s own research found that only 35% per cent of Britons think they’ll be able to retire when they want to. It certainly seems that Jeremy Hunt might get his wish to keep more people in their 50s, 60s and even 70s staying in work. But, of course, it is not for him to demand that.

"Rather, everything possible should be done to support people in their financial planning, allowing them to achieve the retirement they deserve despite these volatile economic times. To that end, more should be done to champion the role of independent financial advice. While there are likely to be tough times ahead, seeking advice will provide welcome reassurance that Britons are doing all that they can to protect their hard-saved pension savings and achieve their retirement goals."