Commenting on the decision by the Bank of England’s Monetary Policy Committee to keep interest rates on hold at 0.25%, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“The Bank of England seems set to hold interest rates at their current levels for the long term, so the most important pronouncements from the Bank this month were its projections for inflation and for economic growth.
“It has long been clear that inflation is set to rise further this year and now the Bank are predicting that it is unlikely to subsequently return to target until 2019. Businesses we have been speaking to have clear expectations of rising prices and narrowing margins this year and we have concerns that this could leave businesses vulnerable to cost increases that will hit many later this year in the form of business rate rises, the introduction of the Apprenticeship Levy, rising pension costs and increases in the National Living Wage. Targeted government action may be needed to tackle this perfect storm of costs at a time of rising prices.
“It is better news that the Bank has substantially upgraded its economic growth projections for this year and marginally uprated its expectations for 2018 and 2019. However, Scotland cannot afford to continue to lag far behind UK growth levels and the priority for politicians in the Scottish Parliament must be to focus their attention on driving down business costs, supporting our international trading ambitions and delivering the supply of skills and talent that business requires.”