Firms welcome interest rate cut but remain concerned by growth outlook

Businesses in Greater Birmingham have welcomed the decision to cut interest rates to 4.5 per cent – but warned further action is needed to support firms.

The Bank of England’s monetary policy committee voted yesterday to cut interest rates by 0.25 per cent to provide some financial relief to borrowers.

However, the Bank also downgraded its 2025 growth forecasts made in November from 1.5 per cent to 0.75 per cent because of a fall in household and business confidence since the budget.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “It was pleasing to see the Bank of England take the proactive step of cutting rates as businesses continue to operate in an uncertain economic climate.

"However, the long-term direction of travel for monetary policy is still unclear as data from our latest Quarterly Business Report reveals the ongoing cost pressures firms face on a daily basis.

"Rising wages are also likely to cause upward inflationary pressures so it remains to be seen how quickly the MPC decide to move ahead with further rate cuts.

"The Government will also need to offer a more coherent plan if we are to tackle rising costs for businesses - business rate reform, easing recruitment pressures and driving international trade will need to figure highly on the agenda."

Andrew Goodacre, CEO of Bira (British Independent Retailers Association), which represents over 6,000 independent retail businesses across the UK, said: “The reduction in interest rates was expected and is welcome news for the retail sector.

“We have consistently maintained that rates have unnecessarily remained high for longer than required, and we anticipate this reduction will help boost consumer confidence."

However, Mr Goodacre expressed concerns regarding the revised economic growth projections, adding: “While the Bank of England is taking steps to stimulate growth through rate cuts, more immediate action is needed from the government to support high street businesses."

Gary Davison, managing director at Davisons Law, which has offices across the Midlands and Wales, said: “This will be a welcome relief to homeowners with a mortgage and those looking to buy property, both of whom can look forward to cheaper repayments.

“Nonetheless there remains pressure for further cuts to give the property market continued and well needed impetus.”