Recession: Birmingham business leaders urge government to help city companies as interest rates rise

Record inflation figures see Birmingham businesses struggle to hire and pay energy bills, the Greater Birmingham Chambers of Commerce reveals

The government must act decisively to offer fiscal support to Birmingham businesses following the announcement by the Bank of England that interest rates are to rise, the Greater Birmingham Chambers of Commerce has urged.

The Bank announced an interest rate rise to 1.75 per cent - their highest level for a quarter of a century - yesterday (Thursday, August 5).

Greater Birmingham Chambers of Commerce (GBCC) said city businesses were already struggling to hire and grapple with soaring energy prices and huge cost pressures.

The plea comes weeks after West Midlands Combined Authority revealed the region’s economy had shrunk by 11% following the pandemic - blamed, in part, on the region’s large automotive sector and high number of exporting companies.

Those figures have been announced as London recorded a 1.2% growth in the first three months of 2022 - the highest of any UK region and outstripping the national average of 0.8%.

Raj Kandola, Greater Birmingham Chambers of Commerce Head of Policy

Raj Kandola (pictured), the GBCC’s head of policy, said: “As businesses grapple with record levels of inflation, the Bank of England was left with little room for manoeuvre as interest rates were raised to their highest level in a quarter of a century.

“However, the move will do little to quell the rise in wholesale gas prices which have been fuelled by the conflict in Ukraine and the Bank’s projections for the year ahead will offer little respite to firms up and down the country attempting to navigate a wave of economic uncertainty.

“On the ground, the picture remains mixed. Data from our latest Quarterly Business Report revealed domestic demand and turnover projections remain strong, however, the longer inflationary pressures continue to bite, consumer spending will continue to take a hit.

“That’s why the Government needs to act decisively and offer fiscal support for those businesses that are struggling to hire and grappling with soaring energy prices and huge cost pressures – immediate measures such as cutting up front costs for businesses, expanding the Shortage Occupation List and removing VAT from energy bills would be a sensible start.”

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