INTEREST rates should be held at 0.5 per cent to help small businesses survive, says the Wessex region of the Federation of Small Businesses.
The FSB is concerned that any increase in the rate will do more harm than good.
Reports conducted by the organisation show that small business confidence fell in the final quarter of 2010, and the outlook for 2011 remains muted.
And it says a rise in the base rate will fuel small firms’ lack of confidence and will hinder growth.
Ken Moon, chairman of the FSB’s Wessex region, said: ‘The Bank of England must look to promote growth and leave tackling inflation as a medium-term priority, at least until the impact of the increase in VAT and fuel duty has levelled out.
‘Small business confidence is low, so it is vital that this important sector can begin to grow again.
‘While we understand that an increase in the base rate will help to alleviate inflation, we are concerned that with already high unemployment and the figures likely to rise as the full impact of public sector cuts bite, that we must avoid a jobless recovery.’