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23rd March 2023

Chamber comments on inflation and interest rate announcements

In response to the ONS reporting that inflation had risen to 10.4% in February, the Bank of England increased interest rates from 4% to 4.25%.

Paul Butterworth, Interim CEO of Chambers Wales South East, South West and Mid, said:

“Despite forecasts that inflation had peaked and would be easing, the unexpected rise in inflation in February indicates that businesses will need to wait for the economic stability they need.

“High inflation remains a concern for SMEs as we have seen consistently in our quarterly economic surveys. In Q4, 75% of businesses in Wales cited inflation as more of a concern to them than in the previous quarter.

“Today’s decision to raise the interest rate to 4.25%, the 11th consecutive rise, shows that the Bank of England is taking action to tackle inflation and ease the cost pressures facing businesses.

“However, this action alone does not address the global factors impacting on inflation and should be part of a wider strategy that includes investment in infrastructure, skills and trade.”

David Bharier, Head of Research at the British Chambers of Commerce, said:

“Today’s 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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