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Coventry & Warwickshire business leaders welcome interest rates decision as firms walk economic tightrope

Business leaders in Coventry and Warwickshire have welcomed the Bank of England’s decision to keep interest rates at their record low but say its forecasts underline the economic tightrope firms are facing.

The Bank of England’s Monetary Policy Committee voted to leave rates at 0.1 per cent while it forecasted that the economic downturn would be less severe than originally predicted, however the recovery, it believes, will take longer.

The economy is expected to fall by 9.5 per cent in 2020 – compared to an original forecast of 14 per cent – and the Bank of England then expects it to grow by nine per cent in 2021 and 3.5 per cent in 2022.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The decision to leave interest rates at 0.1 per cent is welcome and was just about the only option for the Bank of England considering the economic tightrope that businesses across our patch are facing.

“There is encouragement in the Bank’s forecast that the downturn will be less severe although that would still be the sharpest decline for 100 years.

“We must also account for the fact that the Bank’s forecasts are based on two factors which are still uncertain – that there will not be a second wave of COVID-19 that leads to similar disruption to that which we’ve already seen and that the UK will strike a new EU trade deal that makes our exit from the European Union a smooth one.

“The Bank also recognises that unemployment is going to rise and that is why the Chamber is calling upon Government to reduce the tax burden on employing staff in a bid to save as many jobs as possible.”

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