Fiscal landscape remains challenging despite interest rate cut – Chamber

Business leaders today warned the fiscal landscape remains challenging despite a second successive cut in interest rates.

The Bank of England reduced the base rate from 5 per cent to 4.75 per cent on Thursday, following a 0.25 percentage-point cut in August, which was the first drop in four years.

Governor Andrew Bailey said rates were likely to “continue to fall gradually from here”, but warned they could not be cut “too quickly or by too much”.

However, Greater Birmingham Chambers of Commerce said the “trajectory for monetary policy remains unclear” following last week’s Budget.

Director of external affairs Raj Kandola (pictured) said the government must move quickly to unlock investment and drive growth.

He said: “Although the latest rate cut was widely anticipated by city analysts, the projected trajectory for monetary policy remains unclear following last week's Budget announcements.

“Changes to the borrowing rules, a rise in National Insurance for employers and an increase in the minimum wage could all stoke levels of inflation in the coming months.

“This is also likely to add to the ongoing cost pressures local firms continue to face as evidenced by the data collected in our latest Quarterly Business Report.

“Whilst businesses appreciate the challenging fiscal landscape, it's imperative the Government now moves at pace to unlock investment and bolster international trade in order to drive growth.”