Rate Cut Provides Shock Absorber for Business

8th May 2025

Responding to the Bank of England’s decision to cut interest rates to 4.25%, David Bharier, Head of Research at the British Chambers of Commerce said:

“Today's interest rate cut to 4.25% will help absorb some of the shocks that businesses are facing on multiple fronts. Our research has been clear that SME sentiment has been falling since the twin developments of domestic tax rises and a global trade war. 

“Many firms, desperate for financial respite, will be keen to see further rate cuts in the months ahead. National insurance hikes, alongside other cost pressures, are already having an impact, including increased prices, hiring freezes, and reduced investment. BCC has been calling for a tax roadmap to give firms some idea of when pressures will ease. 

“On the global front, this afternoon’s announcement on a framework deal between the US and the UK could help improve business and investor confidence. However, the impact of the wider tariff war will still be felt. Progress elsewhere, such as the EU-UK reset and this week's trade agreement with India will be significant, though their full impacts may take months to be seen.  

“The next few months are likely to remain volatile, and the full impacts of a global trade war, are still uncertain. Businesses will be looking to Government to provide stability and avoid any further pain."