Despite Jeremy Hunt's recent Spring Budget, interest rates are still on the rise following the Bank of England's (BoE) latest monetary policy committee (MPC) meeting.
The MPC decided to step in, voting to a majority of 7 to 2, with a 0.25% rise in interest rates, making it 4.25%. The Bank also said that inflation will fall, although this month's rise to 10.4% was unexpected.
Over the last six months, the MPC has aimed to push for 0.5% increases in the interest rates but chose not to hike it as far this time around.
In the BoE's report, it states:
"CPI inflation is still expected to fall significantly in 2023 Q2, to a lower rate than anticipated in February. This lower-than-expected rate is largely due to the near-term news in the Budget, including on the energy price guarantee, alongside the falls in wholesale energy prices."
There are concerns across multiple industries that rising inflation, coupled with the Bank's increasing interest rates, will continue to damage business.
Key concerns from leaders
One of the leading bodies, the Federation of Small Businesses (FSB), hopes the latest uptick in interest rates will be the last.
Martin McTague, national chair of the FSB, said:
"This latest increase in the base rate means more worries for small firms carrying debts with floating rates, and will make it that bit harder for ambitious businesses to get the funds they need to grow, to pay for a new bit of kit, an extra shop, or a training programme.
"We were disappointed that the recent Budget did not contain sufficient measures to set small firms back on a path to growth.
"Although the schemes announced will take some time to have an effect and are not as comprehensive as we would have liked."
Mr McTague went on to say that there was little for small businesses to celebrate, with investment incentives aimed squarely at large corporates and only scraps for small, innovative firms.
The Chancellor's Budget
Hunt's Spring Budget, on 15 March, was built up as a way to tackle inflation, despite the forewarning that tax cuts would be off the table.
In his speech, he set out the four ‘Es' - enterprise, education, employment and everywhere. These targets are aimed at boosting growth and support across the UK.
Hunt said:
"Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The International Monetary Fund says our approach means the UK economy is on the right track.
"But we remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability.
"Today, the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
"They forecast we will meet the Prime Minister's priorities to halve inflation, reduce debt and get the economy growing. We are following the plan, and the plan is working."
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