Business leaders welcome first interest rates cut since March 2020

Business leaders across the West Midlands have welcomed the Bank of England’s decision to cut interest rates for the first time in four-and-a-half years.

The Bank of England’s monetary policy committee (MPC) yesterday voted by a narrow majority – five votes to four – to reduce its base rate to 5 per cent from 5.25 per cent.

It marked the first interest rate cut since the start of the pandemic in March 2020.

Interest rates dictate the cost of borrowing set by high street banks and money lenders for the likes of mortgages and credit cards.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce (GBCC), said: “Yesterday’s interest rate cut was widely predicted by a number of city analysts and many businesses will hope this is a signal of intent for further loosening of monetary policy in the months and years to come.

“However, messaging from the Bank of England would suggest that they will continue to adopt a cautious approach moving forward given the wider geo-political tensions we continue to see across the globe – all of which could stoke energy prices and inflation in the months to come.

“Our Quarterly Business Report revealed that cost pressures remain prevalent for a number of local firms and many will be hoping for the Government to use the upcoming Autumn Statement to set out a blueprint for growth – tackling low investment, bridging the skills gap and minimising trade disruption will need to figure highly on the agenda.”

GBCC members have also been reacting to the interest rates cut.

Ed Siddall-Jones, managing director of commercial property agents Siddall Jones in Birmingham, said: “The interest rate cut to 5 per cent is likely to have a generally positive effect on the commercial property market.

“However, it’s worth noting we are taking more calls from property owners looking to dispose of their commercial assets now prior to an anticipated increase in capital gains tax in the autumn budget - something to think about!”

Gary Davison, managing director of Davisons Law, which has 14 offices across the Midlands, London and the Cotswolds, said: “It's evident the market has been hoping for, and anticipating, a reduction in the interest rate for some time.

“This will undoubtedly be a spur to the built-up demand amongst buyers and sellers who have been waiting for a green light in terms of cheaper mortgage availability.

“We are expecting to see significant growth in transaction numbers as a result of the cut.”

Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), which works with over 6,000 independent businesses of all sizes across the UK, said: "We have been calling for a cut in interest rates for many months and so we are delighted that the Bank of England has finally decided to listen.

“Interest rates climbed too high too quickly, and whilst we can see that not all inflationary pressures have eased, the cut is needed to bolster consumer confidence, which in turn should boost consumer spending.

“The cut will be seen as an important staging post as the economy starts to turn the corner on years of inflationary shocks. Businesses can start to anticipate cheaper borrowing and investment funding.”