More pressure was put on the government to secure a favourable and orderly Brexit, business leaders in Greater Birmingham said today.
This follows the Bank of England’s decision to keep interest rates at 0.75 per cent – a unanimous decision largely based on the threat to growth because of additional trade barriers and Brexit-related uncertainty, said Greater Birmingham Chambers of Commerce (GBCC).
Official minutes from the latest Monetary Policy Committee meeting revealed that upcoming predictions were based on a “smooth transition” for Brexit and are only expected to raise the base rate once a year until 2021.
Concerns were also raised over the strained trading relationship between China and the USA and the detrimental impact this could have on UK economic output.
The official report also contained an assumption that interest rates would gradually fall back to the preferred 2 per cent target set by the Bank.
Paul Faulkner (pictured), chief executive of the GBCC, said: “Whilst there was no surprise to see the Bank of England maintain the base rate, it was interesting to see Governor Carney take the rare step of intimating at a possible rate rise as a result of a no-deal Brexit – especially as the Bank lowered rates almost instantly following the referendum result in 2016.
“The Governor pointed out that the hypothetical decision to either reduce or raise rates based on this scenario would be predicated on a range of factors, notably the value of the pound, the level of consumer demand and the subsequent impact on supply demand, such as the demand for labour.
“For the Governor to take such an unprecedented step is likely to reiterate the pressure on the Government to secure a favourable trade deal and minimise the likelihood of a disorderly Brexit.
“Analysis from our latest Quarterly Business Report revealed that concerns amongst local businesses over rising interest rates were at their highest in four years – surveying for our latest report begins next week and I’d urge businesses in the region to share their concerns on this and other contentious topics.”
To access the latest Quarterly Business Report go to: https://www.greaterbirminghamchambers.com/media/621807/gbbc_qbr-q3-webready.pdf