The Government must take decisive action if businesses are to battle their way through the difficult months and years ahead, according to the boss of one of the UK’s biggest industry bodies.
The Bank of England has put interest rates up to 3 per cent from 2.25 per cent with Governor Andrew Bailey warning the country faces the longest recession since reliable records began in the 1920s.
East Midlands Chamber chief executive Scott Knowles said if businesses are to have a chance of getting through the months ahead without cutting investment or jobs, the Government must first get the economic basics right – including providing clarity on tax plans and regulations, and investment in transport links.
He said: “The largest single increase in interest rates is a clear signal yet by the Bank of England that businesses should expect a high interest rate environment for the foreseeable future.
“This will inevitably hamper investment intentions, which are already lagging significantly due to the low confidence affecting many firms right now amid a cost-of-doing-business crisis not helped by a lack of certainty.
“Many businesses at this time of year are entering their business planning cycle for the next financial year and the lack of clarity on energy costs from 1 April 2023, among other inflationary pressures such as rising interest rates, will protract or even cancel planned investment in some cases.”
He said the Chamber’s latest Quarterly Economic Survey showed confidence about company profitability and turnover had both as had plans to invest in people, plant and machinery.
He said: “We understand the need to address rampant inflation, but equally the constant cycle of rates rises means these trends are unlikely to improve anytime soon unless the Government gets serious about supporting business with mountain concerns.
“Later this month, we will launch a Business Manifesto for Growth in the East Midlands and Beyond in Parliament that urges decision-makers to ‘get the basics right’.
This means developing a long-term approach to business taxation and regulation, improving digital and physical connectivity, and backing firms to invest in people.
“By addressing the underlying structural issues that are holding many firms back, they can eventually get on with doing with what they do best – which is creating growth, job opportunities and wealth in their local areas, and driving the national economy forward.”
