SCC Comment on Today’s Bank of England Interest Rate Rise

Date Posted: 4 Aug, 2022

Commenting on today’s BoE interest rate rise from 1.25% to 1.75%, the highest in over 25 years, Dr Liz Cameron CBE, Chief Executive of the Scottish Chambers of Commerce, said:

“This latest interest rate rise is a sign of the Bank of England’s drive to get inflation under control and was largely expected. Soaring prices are the biggest challenge facing businesses in Scotland and across the UK currently.

“The risk is that rising interest rates will cause demand growth to weaken further in the coming months, as people are encouraged to save which is hoped will cool supply demand. However, firms are still telling us that they are raising their prices now in response to record high costs for energy, labour, food and raw materials.

“Our latest research also indicates that most SMEs are holding back or pulling back investment, which does not bode well for growth prospects and long-term business confidence. While monetary policy begins to step up its response to the current economic climate, it must also come in hand with further support from government to ease the upfront cost burdens impacting businesses.”