Nearly half of businesses in the UK have been negatively impacted by cost of borrowing, according to new research from the British Chambers of Commerce (BCC). Ahead of this week’s interest rate decision, new research by the BCC Insights Unit shows nearly half of firms say the cost of borrowing is negatively impacting their business.
When asked if their company is directly impacted by the current interest rate – whether positively, negatively, or not directly, a survey of 726 organisations found:
Businesses were then asked why the current interest rate was having a positive or negative impact, depending on how they answered the previous question. For those reporting negative impacts, businesses cited increasing borrowing and mortgage costs, alongside reduced demand from customers. For those reporting positive impacts, firms generally mentioned higher returns on cash reserves.
The research was carried out between 17th July and 11th August. The results come as the BCC’s Quarterly Economic Survey has shown growing concern over interest rates, with 41% reporting this as a concern in Q2, compared to 36% in Q1. The quarterly survey also showed fewer firms are expecting higher price rises.
Shevaun Haviland, Director General of the British Chambers of Commerce said “With all eyes on the Bank of England later this week, our data is a timely reminder about the pain many businesses are suffering because of rising interest rates.”
“Firms tell us every day that they are struggling to pay off debts and finding it difficult to take out loans. Business investment is fundamental to the economic growth everybody wants. Firms will only be able to invest when the financial burdens, including interest rates, ease.”
“The Bank of England has indicated rates are nearing their peak. Businesses need clarity and certainty this week, that an end to the cost-of-borrowing pressures are really on the horizon.”