The British Chambers of Commerce (BCC) has warned that businesses are facing ‘unprecedented cost pressures’, with inflation predicted to surge.
However, firms also worry that another rise in interest rates will set back the economic recovery from the pandemic. The BCC said there was already strong evidence of an economic slowdown in the final quarter of 2021 before the Bank of England (BoE) raised interest rates in December.
Then the BoE raised interest rates from 0.1% to 0.25%, but also raised their inflation forecast to 6% for 2022.
The BCC’s survey showed one in four of the 5,500 firms questioned were worried about rising interest rates. Additionally, a record proportion of three in five expected their prices to increase in the next three months.
Supply chain disruption also remained a continuing theme for cost pressures across many sectors.
Suren Thiru, Head of Economics at the BCC, said: ‘Our latest survey suggests that the UK’s economic recovery slowed in the final quarter of 2021 as mounting headwinds increasingly limited the key indicators of activity.
‘The persistent weakness in cash flow is troubling because it leaves businesses more exposed to the economic impact of Omicron, rising inflation and potential further restrictions.’
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