The Bank of England has taken the decision to hold interest rates at 5.25%.
Paul Butterworth, CEO at Chambers Wales South East, South West and Mid, said:
“Today’s decision by the Bank of England to hold interest rates at 5.25% offers stability to businesses in Wales. Until inflation meets the government’s 2% target, it is likely that the interest rate will remain at this level for some time so businesses can adapt and plan accordingly.
“However, the high level the rate is currently held at is still a source of concern for SMEs. 41% of businesses in Wales stated that interest rates were more of a concern to them in Q4 of 2023 than in the previous three months in our Quarterly Economic Survey.
“With a leadership contest in Wales happening now and a UK general election expected in the latter half of the year, it is important that clear plans for the economy are set out to reassure and boost the confidence of businesses.”
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.”