The latest interest rate rise is the clearest signal yet of the Bank of England's intention to get inflation under control. Spiralling prices are cited by businesses as by far and away the top concern right now. But, given the extremely precarious state of the economy, this decision is not without risk for businesses and consumers that are exposed to banking or overdraft facilities.
The arrival of the summer recess marks a respite period for many (other than Conservative Party leadership candidates and members) from an intense period of policy-making affecting trade. As a new Prime Minister takes office on 6 September, the in-tray on international trade issues will be daunting.
The BCC’s quarterly Trade Confidence Outlook for Q2 2022 showed the proportion of exporters reporting increased overseas sales to be unchanged from Q1 at 29%, while those reporting a decrease remained at 25%. This compares to around 40% of businesses consistently reporting increased domestic sales across the same time period in the BCC’s Quarterly Economic Survey (QES).
“Given today’s turbulent economic conditions, BCC welcomes the launch of the new version of the RLS, which will open for applications in August 2022, run by the British Business Bank and its partners. “The Chamber Network has consistently campaigned for this measure which will provide an additional option for firms struggling with high energy, staff, and supply chain costs. "
Business supports these efforts to develop an improved trade agreement with Israel to boost the supply of services between our countries. There are also opportunities to cut the costs of exports and imports through strong digital trade rules and more efficient customs regulations.
The rise in Consumer Prices Index inflation to 9.4% is the ninth monthly increase in a row and another record high. This represents a huge amount of cost pressure that businesses and households across the UK have had to absorb. These costs are set to rise further with surges in energy bills coming down the track.
The labour market remains incredibly tight, in many cases affecting firms’ ability to maintain profitable operations. Although the latest ONS Labour Market figures show the employment rate has risen, it is having no noticeable impact on the overall number of job vacancies.
New figures released by the British Chambers of Commerce (BCC) reveal firms’ recruitment struggles remain at record high levels. BCC proposes a three-point action plan to tackle the huge number of unfilled vacancies. This includes urgent reform of the Shortage Occupations List (SOL) needed to cover more people and job roles.
Overall, on goods exports growth, the pace of recent progress is being maintained, although goods export trade with the EU was not as strong as in April 2022. Of concern is the widening trade deficit in the three months to May 2022 - which has risen on that measure on goods for four successive months.
Today's monthly GDP growth figure of 0.5% is welcome news but masks serious underlying issues of growing imbalances within the economy. Worryingly, our most recent quarterly economic survey also showed that longer term business confidence measures have begun to fall.