The decision to increase interest rates by 0.25% to 1%, taken this week by the Bank of England’s Monetary Policy Committee, could do more harm than good according to the British Chambers of Commerce.
Suren Thiru, Head of Economics at the British Chambers of Commerce predicts ‘considerable alarm’. He said: “The decision to raise interest rates will cause considerable alarm among households and businesses given the rapidly deteriorating economic outlook and mounting cost pressures many are facing.
“The Bank of England face an unenviable trade-off between soaring inflation and a wilting economy. However, higher interest rates will do little to address the global headwinds and supply constraints driving this inflationary surge. It also raises the risk of recession by damaging confidence and intensifying the financial squeeze on businesses and consumers.
“With monetary policy continuing to tighten, it is vital the fiscal policy is now loosened to ease the crippling cost pressures faced by consumers and businesses, and to support wider economic activity. Urgent action is needed to limit the unprecedented surge in costs facing businesses, including financial support for those struggling with soaring energy bills.”
