Ahead of this week’s interest rate decision, new research by the BCC Insights Unit shows nearly half of firms say the cost of borrowing is negatively impacting their business. 

When asked if their company is directly impacted by the current interest rate – whether positively, negatively, or not directly, a survey of 726 organisations 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%. 

Businesses were then asked why the current interest rate was having a positive or negative impact, depending on how they answered the previous question.

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 research was carried out between 17^th July and 11^th August. 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. Businesses need clarity and certainty this week, that an end to the cost-of-borrowing pressures are really on the horizon.”

The British Chamber of Commerce Qatar posted the following statement on its website addressing the current situation in Qatar:

The latest market sentiment in Qatar suggests that rather than a negative downturn in business, the effect of the continuing GCC embargo could well herald the beginning of a new boom period for business in Qatar. The Qatar government is expected to announce shortly an injection of funding for a massive new investment programme along with several new flagship projects to boost Qatar’s economy over the short to medium term.

The government has determined that this economic investment is now imperative to ensure future self-sustainability and to pivot away from its previous reliance on its GCC neighbours. The local market has strongly endorsed and welcomed this move and echoed the prevailing sentiment that Qatar should forge a new economic path forward, in keeping with its 2030 vision.

Alongside such sentiment, we hear repeatedly from senior Qatar business sources that they will not forget their friends for showing solidarity with Qatar during this dispute. This presents UK companies with a golden opportunity to grow and strengthen business in Qatar. The next few months may well prove to be a critical window for British companies to explore the Qatar market. UK businesses new to Qatar should consider taking early steps to establish their brand and presence in the market to ensure they are well placed to benefit from the new stimulus being made by the Qatar government. UK businesses who are active and/or represented elsewhere in the GCC region should similarly contact the British Chamber for advice on how to protect existing business links with Qatar and how to pursue the surge in new business.

We strongly advise all UK businesses keen to trade with Qatar, or who wish to take advantage of the anticipated surge in projects and contracts, to make early contact with the British Chamber of Commerce in the market.

For more information, please visit our website: www.bccq.qa or contact us directly via email: info@bccq.qa

Following the severing of diplomatic ties with Qatar by many of its regional neighbours, most notably by Saudi Arabia, and the UAE, the Qatar government has reacted promptly to stabilise the economy and ensure commercial and trade relations remain undamaged.

The government has also stated that it intends to continue its current infrastructure and development program on the same timetable as before The general reaction from the market is that it remains business-as-usual.. Many British companies have reported that the trade embargo has not yet had any significant impact on their UK-Qatar business.

The primary impact has been the need to reroute cargo (both flights and shipping) via Oman and Kuwait. The Qatar authorities have moved swiftly to agree new measures to strengthen the trade and shipping links with the Omani ports of Sohar and Salalah and similarly to reinforce air links with Kuwait, Muscat and other hubs in the wider region. That net effect has inevitably meant small delays to cargo shipments and increased transportation costs. But overall, the impact has not been as dramatic as initially feared and shipments are now arriving on a regular basis.

The British Chamber of Commerce Qatar (BCCQ) remains confident that the long-term economic prospects for Qatar look exceedingly strong. While it is hard to say how quickly and amicably the dispute will be resolved, attractive business opportunities in all sectors remain for UK businesses to expand trade with Qatar. In the eyes of the business community in Qatar the breakdown in relations has not affected commercial and economic affairs unduly. For those UK companies with existing business in Qatar or immediate prospects, the British Chamber would encourage you to renew contact with your key customers and partners and make early plans to visit the market. For those UK businesses based in UAE, Bahrain and Saudi Arabia or who trade with Qatar through partners and agents based there we would urge you to contact the British Chamber to discuss how best to approach the market in the light of the current trade embargo.

The British Chamber of Commerce Qatar would like to encourage those who have enquiries about the current commercial market in Qatar to contact us. We are happy to provide further information and advice to UK businesses keen to trade in Qatar.

Commenting on the Queen’s Speech, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC) said:

“While Brexit isn’t the top immediate priority for many businesses, firms of every size and shape want to avoid turbulence and confusion during the Brexit transition. The government’s proposed bills on trade, customs and immigration must minimise adjustment costs and maximise opportunities. Achieving this will require continuous and constructive engagement with business communities across the UK.

“Importantly, many of the real, practical priorities for businesses across the UK can be delivered without new primary legislation. Ministers must inject real momentum and pace into the major infrastructure schemes that have already been agreed and announced. They must cut back on the stifling up-front costs that deter investment and risk-taking, and press ahead with an Industrial Strategy that helps places across the UK achieve their potential. This is an important moment for ministers to show that they are doing their day job, and delivering a stronger environment for growth here at home.

“Businesses want to see a workable government going about its day job, and clear signals that the economy is once again front and centre in political life. Consensus and a strong partnership between government and business will be critical at a time of significant change.”

On the Customs Bill:

“Chambers of Commerce facilitate tens of billions of pounds worth of UK trade across borders every year. We stand ready to work with the government to develop a UK customs system that supports free-flowing trade between UK firms and their customers and suppliers around the world. It is crucial that business and government work together, as well, to ensure that a new UK customs code underpins seamless trade between the UK and the continent in the years to come.”

On Immigration Bill:

“The needs of the economy must be at the heart of this once-in-a-generation overhaul of the UK’s immigration system. While businesses accept the need for controls over migration flows, they want clear assurances that they will be able to recruit from overseas to fill vacancies when they are unable to find or train suitable candidates here at home.

“After Brexit, they will also want to see a flexible system for the movement of labour and skills between the UK and the EU that enjoys clear public support. This is also a major opportunity to simplify the Home Office’s bureaucratic processes, which impose heavy costs and great uncertainty on businesses and individuals alike.”

On the Trade Bill:

“Safeguarding and retaining the favourable terms of trade that UK businesses have enjoyed under EU free trade agreements negotiated by the EU over the past four decades must be a top priority for ministers as the UK develops its own trade policy. The firms we represent say that confirming existing levels of market access is a bigger immediate priority than launching new free trade negotiations with new countries and markets around the world. They also need ground-level trade promotion and support to take advantage of the opportunities that new trade agreements may create in future.”

On the Great Repeal Bill:

“At a time of change, businesses want as much short-term certainty and stability as possible on their regulatory obligations. This bill must deliver continuity and the day-one equivalence that is necessary for businesses to continue to trade seamlessly with customers and suppliers, both in Europe and across the world.”

On the HS2 Phase 2A Bill:

“We welcome the government’s commitment to legislate for the second phase of HS2, which will extend the benefits of the line to many more business communities. However, we will continue to press for the completion of a full national network – and to ensure that other key road and rail priorities, both small and large, are fully funded and executed throughout the UK. We need to have the fundamentals right here at home, including infrastructure, to trade successfully in the future regardless of the eventual Brexit deal.”

Commenting on the trade statistics for March 2017, released today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

“The sharp deterioration in the UK’s net trade position means that trade is likely to have been a drag on UK growth in the first quarter of the year, following a strong performance in the previous quarter. This deterioration reflects a sharp rise in imports in the quarter, and a slight fall in exports.

“While many exporters are benefiting from improving growth outlooks in key trading markets, and the weaker pound is helping to make them more price competitive, our Quarterly Economic Survey shows businesses under pressure from the rising costs of raw materials. The widening in the UK’s trade deficit, and weakening output from the industrial and construction sectors, is further evidence that we are still a long way from achieving a rebalancing of our economy.

“As the UK moves through the Brexit process and beyond, it is vital that more is done to provide greater practical assistance for exporters, including developing an expanded trade mission and fairs programme and funding front-line, face-to-face support for exporters to help get UK businesses trading with the world.”

Giving his reaction to the Budget 2014, John Longworth Director General of the British Chambers of Commerce (BCC) said:

“Business wanted a Budget that was disciplined, focused, and geared towards the creation of wealth and jobs – and that’s what the Chancellor has delivered.

“With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the Chancellor heed our call to help firms take on and train tomorrow’s workforce. Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work.

“Osborne’s focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.

“As with any Budget, there were some populist measures that were not at the top of business’s wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation.

“Many of these measures are excellent for now, and for the future. Yet the nurturing of a truly great economy requires more action than one Budget can deliver. At the upcoming General Election, Britain’s entire political class must commit to a long-term programme that delivers better infrastructure, a stronger skills base, access to finance for growing companies, even more export support and a clear, consistent tax environment. Otherwise some of the Chancellor’s welcome moves might not have the desired effect in years to come.”

Commenting on the new forecasts published today by the Office for Budget Responsibility in conjunction with the Chancellor’s Budget, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:

“The OBR’s upgrading of its December economic forecasts was widely expected. Our own economic forecast – released just last week – tells a similar story. The pace of growth over the coming years will be satisfactory, but slightly below the pre-recession historical average.

“On the public finances, we agree that there will be gradual falls in the budget deficit, but we believe that the pace of the reduction will be slightly slower than the OBR envisages. It is too ambitious to take the view that the UK will generate a budget surplus in 2018. We believe it will take one or two additional years to eradicate the deficit, because tax receipts have suffered from a fall in oil and gas production and problems in the financial sector.

“The government must continue with its plans to streamline current public spending, to ensure that the public finances improve over the medium term, and the private sector can generate a lasting recovery.”

Commenting on specific announcements within the Budget, BCC Director General John Longworth added: 

YOUTH EMPLOYMENT

“We told the Chancellor very bluntly that he needed to extend the Apprenticeships Grant for Employers if he wanted to see companies creating enough apprenticeship places to meet demand. His actions demonstrate that he was listening, to the benefit of businesses and young people alike. Helping companies take on apprentices is one of the best ways for a Chancellor to invest limited resources in Britain’s future.”

BUSINESS INVESTMENT

“Consistent allowances help companies invest with confidence. Given that business investment remains far below its pre-recession level, it is fantastic that the Chancellor has responded to our call to extend the Annual Investment Allowance, and that he has doubled the amount covered to £500,000 from 2015. That will give many growing and medium-sized companies the confidence to push ahead with investments they’ve long wanted to get off the drawing board.”

SUPPORT FOR EXPORTERS

“Export finance problems stop many companies from getting their goods and services into new markets. To support our exporters, Britain’s export finance support must match that of our global competitors. The moves made by the Chancellor to increase the support available, and to lower the interest rates charged to companies, are a big step in the right direction. Ensuring awareness of this support amongst the growing and medium-sized firms that stand to benefit is crucial, however, to this policy’s success. Chambers of Commerce will continue to work closely with UKEF to help businesses get their goods into market with the best possible finance support.

“While finance for international transactions is important, so is the level of support for businesses looking to expand into new and fast-growing markets. Moves to improve international transport connections through regional airports, and to simplify Air Passenger Duty, are a good start. Yet we could do even more, particularly through the Overseas British Chambers and business groups that BCC and UKTI are linking together to form the first-ever global British business network.”

ENERGY

“The Chancellor’s Budget clearly recognises the damage that unilateral measures can do to the competiveness of British businesses. Our members will welcome the cap in the Carbon Price Floor, which will help all companies, and the extension of compensation for energy intensive industries.

“Furthermore, by taking forward all the recommendations contained in the Wood Review of Offshore Oil & Gas, the Chancellor has made a significant step toward maximising oil and gas recovery in the UK as part of a diverse energy mix.

“Looking ahead, it is crucial to ensure that energy does not contribute ever further to the rising cost of doing business in the UK – so continued attention and investment are required.”

INFRASTRUCTURE

“The BCC has long called for more funding for road maintenance – a key bugbear for so many businesses – and welcomes the new pothole fund announced in the budget. Incremental support for other capital projects and flood defences are also positive. Yet, as ever, infrastructure projects both large and small are judged on how quickly they are delivered on the ground. Infrastructure delivery is the key business priority, so the government must move swiftly from announcement to action, on road repairs, house-building, flood defences and more.”

PENSIONS AND SAVING

“The unexpected and radical modernisation of pension rules and ISAs will be welcome news for many businesspeople and their employees. Greater flexibility and choice, combined with an end to some of the arbitrary and punitive tax rules that undercut prudent savers, favour aspiration, enterprise and long-term planning.”