CBI responds to MPC decision raising interest rates

Alpesh Paleja, CBI Lead Economist, said:

“With inflation high and price pressures remaining acute, the Bank of England has rightly raised interest rates again to anchor inflation. But with the outlook looking weaker, monetary policy is walking an increasingly fine line between taming inflation and supporting economic activity.

“We expect only meagre economic growth ahead, as a historic squeeze on household incomes bites hard on spending. Monetary policy can only do so much, and must now be coupled with government action to prevent a deeper and more prolonged downturn. Creating a permanent investment incentive and tackling skills shortages by introducing immediate flexibility to the apprenticeship levy would be strong first steps for boosting confidence.”