The Bank of England’s interest rate cut will provide a confidence boost to firms in Coventry and Warwickshire, according to business leaders.
The Monetary Policy Committee cut rates from 5.25 per cent to five per cent, while the Bank reported an improved growth forecast for the UK economy of 1.25 per cent for 2024.
Corin Crane, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “Getting inflation down has been a key priority over the past couple of years and now it has hit the two per cent target market – and stayed there – it has given the Bank of England the opportunity to cut rates.
“However, it was still a close run thing within the committee and, therefore, we don’t expect rates to fall much further very quickly.
“That said, the direction of travel will be a boost for businesses and will give them a little more confidence to invest and grow.
“That, together with lower inflation, the improved growth forecast and a stable new Government should really start to feed into a much more positive outlook.
“The Chamber will be holding a roundtable event with the Bank of England’s West Midlands agent in September if any businesses would like to attend and give their assessment of the economy and its outlook.”
David Bharier, Head of Research at the British Chambers of Commerce, said: “Today's decision by the Bank to cut the interest rate gives many smaller firms welcome breathing space and could trigger an increase in investment as borrowing costs decline.
“This cut, the first since 2020, became inevitable as inflation has settled at around two per cent over recent months. Our economic forecast expected this cut, as well as a further reduction by December, bringing the interest rate to 4.75 per cent by the end of the year.
“The Bank will be monitoring events closely as global conflicts and trade tensions could still exert price pressures on commodities and the finely balanced 5-4 voting split shows this caution. For UK SMEs, our research shows that inflation remains a top issue for them, albeit down on the peak of concern in 2022.
“A cautious and well-communicated approach from the Bank will support business confidence, which has been steadily increasing in recent months.
“As the Chancellor begins to prepare her Autumn budget, we want to work in partnership with Government to unlock the investment needed to boost economic growth.”
To attend the roundtable with the Bank of England contact Sean Rose at the Coventry and Warwickshire Chamber of Commerce at seanr@cw-chamber.co.uk