Bank Base Rate Increase to 5.25%: Impact on Businesses in Dorset

The Bank of England announced another increase in the bank base rate, raising it to 5.25%. This decision comes amid growing concerns over inflation and economic stability.

The Bank of England’s Monetary Policy Committee cited soaring inflation, rising costs of living, and a robust economic recovery as the primary drivers behind the decision to increase the interest rate. While the bank aims to control inflationary pressures and maintain economic stability, businesses are now bracing themselves for the challenges that lie ahead.

Dorchester Chamber for Business Vice President Steve Bulley said: “The most immediate impact of the bank base rate increase will be felt by our members with variable-rate loans and mortgages. With borrowing costs expected to rise, businesses may experience higher interest expenses, potentially putting pressure on their cash flow. This could be particularly challenging for small and medium-sized enterprises (SMEs) that heavily rely on loans to finance their operations and expansion plans.

“This interest rate rise, will out further pressure on consumer spending. This in turn could lead to reduced discretionary spending, affecting our members who rely on consumer demand. We expect retailers, restaurants, and leisure industries, in particular, to experience a slowdown in consumer spending, impacting their revenues and profitability.

“While the bank base rate increase may present challenges, it also presents an opportunity for businesses to evaluate their strategies, enhance resilience, and seek innovative solutions to remain competitive in the dynamic business environment.”

In light of the bank base rate increase, businesses in Dorset are urged to take a proactive approach to navigate the changing economic landscape. It is vital for companies to assess their financial positions, review borrowing strategies, and monitor cash flow to ensure sustainable operations. Dorchester Chamber for Business will offer support, advice and signposting to members who need help to maintain profit margins.


With over 100 members you can join Dorchester Chamber for business from £60p/a (no VAT).