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LCCI react to Bank of England interest rate rise

Thursday 2 February 2023

Fiscal responsibility is important, but so is providing support to London's businesses.

Richard Burge, Chief Executive of London Chamber of Commerce and Industry (LCCI), said: “Jeremy Hunt’s plan for growth revolves around fiscal discipline, and the rise in interest rates to 4% by the Bank of England is an understandable and careful approach to help tame rampant inflation. However, a rise in interest rates means that many businesses will once again be asking if they can afford future loans, adding yet more strain to those businesses teetering on the cliff edge.

“The cost of doing business has skyrocketed and businesses are facing huge challenges accessing working capital and securing business loans. Unfortunately, the reality is that this is only going to get more difficult in the short term, especially for small and medium size businesses which have battled to stay afloat over the past three years, first through the pandemic and now amidst economic downturn. In the absence of government support with energy costs and business rates reduction, businesses run the risk of being ravaged by a toxic mix of high inflation, low prices and reduced spending.

“London businesses will be key drivers of the UK’s eventual economic recovery, but current trading conditions are not conducive for growth. When businesses can rely on a sustainable customer base, access to reasonable working capital and a favourable economic climate, productivity will improve and we will business confidence will return. While we welcome the return of stable economic policy from the Treasury and the Bank of England, it is vital that the Government starts to deliver on its promise to create favourable economic conditions for growth, macroeconomic stability and shared prosperity in the longer-term.”

ENDS