Interest rates raised to highest level in 14 years

The Government and Bank of England must work together to ease cost pressures on businesses following a ninth consecutive interest rates hike, business leaders said today.

The Bank of England announced yesterday it was raising interest rates to 3.5 per cent from three per cent - the highest level in 14 years.

The rise will mean higher mortgage payments for some homeowners and those with loans at a time when many people are struggling with the cost of living.

The Bank of England has been attempting to calm rising prices since the end of last year.

Inflation - the rate at which prices rise - has been increasing at its fastest rate for 40 years as the cost of food and energy soars.

Raj Kandola (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Yesterday 's announcement from the Bank of England 's Monetary Policy Committee will come as little surprise for businesses given that data from the Office for National Statistics has continued to show a tight labour market and persistent inflationary pressures.

“Though the Committee described their decision to raise interest rates as both forceful and justified, it is important that they proceed with caution when setting monetary policy in the new year.

“Businesses urgently need the Bank of England and the Government to work collaboratively to ease the significant cost pressures they are facing and to enable them to focus on their recovery and growth. ”