Hopes were high of a further cut in interest rates in December were dashed when the Bank of England’s Monetary Policy Committee voting to hold interest rates at 4.75%.
And with the realities of the Chancellor’s first tax raising Budget starting to hit home, there is much unrest in the business community about higher overheads which will show themselves more clearly in the results for the first quarter of 2025, says the Hull and Humber Chamber.
Chamber Chief Exec Ian Kelly said: “The quarter three figures showed a slightly improved picture with many indicators showing something of a bounce back, but our Quarter 4 results have seen the majority of those gains go into reverse.
“It is clear that increased costs caused by higher overheads and a substantial increase in the cost of employing staff thanks to Rachel Reeves’ first Budget are weighing heavily on the minds of business leaders across the Humber region.
“Most firms say they are now planning to increase their prices in the coming months, while at the same time cutting investment in training and equipment.
“Cashflow and profit expectations are also down as firms look for ways to reduce the impact of higher overheads in the midst of a tightening economy, not helped of course, by the Bank of England’s decision in December to delay a further cut in interest rates which had been hinted at by Bank of England Governor Andrew Bailey when he met senior Chamber Business Leaders at a private lunch in Grimsby in October.”
Nationally, The British Chambers of Commerce said: “The worrying reverberations of the Budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes.
“Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging. Businesses are already cutting back on investment and say they will have to put up prices in the coming months.
“The Government is rightly coming up with long-term strategies on industry, infrastructure and trade. But those plans won’t help businesses struggling now.
“To help business we need to see quick action in three specific areas. Firstly, Ministers should accelerate business rate reform to create a system that incentivises investment.
“We also need the Government to speed up infrastructure investment, to help SMEs in supply chains across the country. Finally, it’s crucial to support exports, prioritising a better trading deal with the European Union.
“Without urgent Government action to ease the pain on businesses, the challenging economic landscape will get worse before it gets better.”
