Make UK comment on interest rates

Commenting on the rise in interest rates Stephen Phipson, Chief Executive of Make UK, said:

“The Bank is caught between a rock and a hard place in having to raise interest rates to try and curb inflation, most of which is generated internationally, in the face of a clearly slowing economy. However, it is especially poor timing for the manufacturing sector which has already begun to put the brakes on investment intentions as firms divert attention to maintaining day to day operations.

“The Bank should be wary of over acting in these sensitive times, however, as repeated increases in rates signals to the financial markets there is more to come. Relatively low-cost borrowing is currently one of the few last lines of defence for manufacturers, with cashflow under pressure thanks to a potent cocktail of high energy, transport and raw material costs. Increasing the cost of finance is the last thing they need to add to their current challenges.

“Government must now do more to tackle the growing cost of living and the cost of doing business which is currently at the highest level in seventy years, in particular with relief on VAT and taxation. This must be accompanied by measures to produce cheaper and greener energy supplies at home to reduce our reliance on overseas, and ensuring firms can access the skilled workers they need. This will all bolster business resilience and agility and help firms withstand further challenging input cost increases.”

The Make UK/BDO Q2 Manufacturing Outlook Survey and Economic Forecasts will be published on Monday 20 June