Shropshire businesses will be hoping that today’s latest hike in interest rates signals the beginning of an end to the rising cost of borrowing, according to the county’s Chamber of Commerce.
The Bank of England has increased the base rate by 0.25% to 5.25% - the 14th consecutive monthly rise, taking it to its highest level in 15 years.
Ruth Ross, chief executive of Shropshire Chamber, said: “This latest increase doesn’t come as a surprise – but it doesn’t come as particularly welcome news to many businesses either.
“While tackling inflation remains the top concern for businesses overall, interest rates are close behind, and are definitely more of a worry for employers than they were at the start of this year.
“More than 90% of businesses in Shropshire employ fewer than 10 people, and while they will have no doubt factored this increase into their plans, they are often the least able to soak up the extra expense.”
She added: “Small businesses tend to be the ones with smaller cash reserves – particularly in the wake of the Covid pandemic – which means they have greater exposure to the fluctuating cost of finance.
“Rates on savings accounts need to keep pace with these increases; it’s not right, or fair, that many banks and finance companies are making money from the situation by failing to pass these rises on in full to their customers.”
The British Chambers of Commerce said there were signs that pressure to raise interest rates further were slowly starting to decline.
Data from the Office for National Statistics shows that input cost pressures for firms are finally falling. And recent BCC research backs this up, with 45% of companies now expecting to increase prices, 15% lower than six months ago.”
Vicky Pryce, economic advisory council member at the BCC, said: “Businesses will be fervently hoping that today’s rise in interest rates is the last they will see.
“We are likely to see a further substantial fall in inflation in July as last year’s energy price rises drop out of the data.”