Mini-budget a ‘critical moment’ for businesses as interest rates rise heaps on further pressure, says East Midlands Chamber

The Bank of England interest rate has risen from 1.75 per cent to 2.25 per cent.

East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive, Scott Knowles, said: “Raising the base rate to the highest level in 14 years is further evidence the Bank of England is taking a hard line on tackling inflation.

"Our Quarterly Economic Survey shows that unrelenting inflation, largely driven by rising energy costs, is by far and away the top business concern at present and is hampering investment prospects.

“But the Bank faces an increasingly tricky balancing act. The interest rate is a very blunt instrument to control inflationary pressures that are largely driven by rocketing energy costs and global supply chain disruption.

"Its decision to raise rates will increase the risk for individuals and organisations exposed to rising mortgage costs and debt burdens – dampening consumer confidence.

“Recent energy price cap announcements will have provided some comfort to businesses and households alike and should place downward pressure on the rate of inflation.

“The fiscal statement by the Chancellor is now a critical moment. He has the unenviable task of shoring up the economy while avoiding additional inflationary stimulus.

“The Bank, looking to dampen consumer demand, and Government, looking to increase growth, could now be pulling in opposite directions.

“What businesses will want to see is a plan to address the short-term drivers of inflation, as well as a long-term strategy to promote investment.”