Hampshire Chamber responds to interest rate rise

Responding to the Bank of England’s decision to raise interest rates for the first time in more than three years, from 3.75% to 4%, Hampshire Chamber chief executive and executive chairman Ross McNally said: “This is unwelcome news for businesses already grappling with higher energy prices and difficult trading conditions, but we recognise the need for decisive action to bring inflation under control.

“For our members in Hampshire and fellow businesses across the UK, stubbornly high inflation is a major threat to economic stability.

“It squeezes budgets, erodes spending power, impacts the bottom line by raising overheads and makes it harder to plan and invest.

“The challenge for the Bank is to strike the right balance. On one hand, interest rate hikes tend to rein in discretionary spending, so lowering customer demand, and it is small and medium-sized businesses who typically bear the brunt of that.

“On the other hand, if we can tackle inflation without adding unnecessary strain on borrowers, then it’s a step in the right direction that will help restore confidence.

“To complement the Bank’s move, we call on the government to redouble its efforts to provide struggling firms with immediate packages of support while stabilising the wider economy and focusing on creating the conditions for sustainable, long-term growth.

“Business viability is the only way to achieve the enduring tax revenues that are needed to address fiscal shortfalls and invest in the public services we all rely on.”