Rate Hold Puts Spotlight On Chancellor 

30th July 2026

David Bharier, Deputy Director of Economics and Insight at the British Chambers of Commerce, responds to the Bank of England interest rate decision to hold

Responding to the Bank of England interest rate decision to hold, David Bharier, Deputy Director of Economics and Insight at the British Chambers of Commerce, said:

"Renewed escalation in the Middle East has compounded market volatility, and against that backdrop, the Bank's decision to hold looks like the right call. The effect of the conflict is still working through the economy, and while inflation has not spiked yet, the Bank expects it to rise above 3% by year-end. 

"At 3.75%, the interest rate is already restrictive and may prove tight enough to do the job without going further. But for most firms, the real pressure sits in costs imposed by policy. Some of these are external, from Brexit friction and new tariffs on global trade. But the heaviest are domestic: the rise in employer National Insurance and the wider cost of employing people. 

"Our data show these domestic costs alone have risen by around 70% over the last ten years for a typical SME – before a single pound of international trade cost is added on top. And that sits well outside the Bank's remit. 

" In today's report, the Bank's own outlook for growth, which it expects to slow, draws on BCC survey data. Businesses have been clear that conditions are weakening. 

"The bigger test now lies with the new Chancellor, not the Bank. The autumn Budget is where the economic agenda for business will be set – and where the pressure on firms will either ease or intensify." 

More detail on the Bank’s decision can be found here.