Interest rate rise compounds short-term pressure on business - Chamber

The Bank of England 's decision to raise interest rates is a further short-term blow to businesses, business leaders said today.

The Bank 's Monetary Policy Committee yesterday raised interest rates to 4.25 per cent from 4 per cent.

It follows an unexpected rise in inflation last month, along with the collapse of two US banks and the rescue of Swiss lender Credit Suisse.

However, Bank of England governor Andrew Bailey said he is “much more hopeful ” for the UK economy.

Greater Birmingham Chambers of Commerce said the inevitable hit to consumer spending as a result of the latest interest rate rise will be a further blow to businesses who are already facing stark cost pressures.

Raj Kandola (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “The MPC 's decision to raise interest rates was no doubt influenced by the unexpected rise in inflation that we saw in February along with the turmoil we 've seen in the banking sector over the last few weeks.

“Nevertheless, the short-term impact on businesses will be there for all to see - notably, borrowing will become more expensive and consumer spending will also take a further hit.

“Decision makers in Westminster will be hoping that wholesale gas prices will continue to fall and supply chain disruption will ease but ultimately, the case for easing the up-front cost pressures firms are facing has become even more apparent as long-term growth projections remain sluggish. ”