New research by the Insights Unit at the British Chambers of Commerce shows nearly half of firms say the cost of borrowing is negatively impacting their business.
A survey of 726 organisations has found:
- 46% of firms overall said it was having a negative impact.
- 9% said it was having a positive impact.
- 45% said they were not directly impacted.
- The business-to-consumer sector (such as retailers and hospitality firms) are far more likely to report negative impacts, rising to 61%.
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 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. Businessesneed clarity and certainty this week, that an end to the cost-of-borrowing pressures are really on the horizon.”