The government and the Bank of England must do more to curb interest rates and lower inflation to avoid firms in Bristol being “pushed to the brink”, the area’s largest business organisation has said.
Following the Bank’s decision yesterday to hike the base rate from 4.5% to 5% – its highest for 15 years – Business West, the organisation behind Bristol Chamber of Commerce, warned pressure on firms in and around the city was increasing at an already challenging time. 
Business West managing director Phil Smith, pictured, said the rate rise, the 13th in a row and larger than many forecasters expected, came as tightness in the labour market prevailed and trade barriers with the EU were driving up costs.
“High inflation and high interest rates could really push some businesses to the brink and solutions must be found that do not depend on the interest rate lever,” he said.
“The decision to raise the base rate will increase pressure on businesses during an already challenging time.
“While the increase indicates the Bank’s efforts to tackle inflation, a higher interest rate seems unlikely to address wage or input prices which have been surging since the start of 2021.”
He said the increase would inevitably impact businesses as consumers with debts would not have as much discretionary income to spend and those companies reliant on overdrafts or variable rate loans would be hit with higher interest costs, impacting their bottom line.
“There are some green shoots in that input producer price inflation has decreased by 1.5% since April, however the Bank must commit to cutting interest rates quickly as inflation slows,” he added.
Meanwhile, West of England Metro Mayor Dan Norris urged the government to act to help families struggling with their payments as the interest rate hike feeds through into higher monthly mortgage payments.
