RESPONDING to news that CPI has stayed static at 8.7%, while core inflation rose by 7.1% in the 12 months to May 2023, Ann Scott, Development Manager (Essex) at Federation of Small Businesses said:

“Today’s rise in core inflation will leave many understandably nervous. The consequences of further interest rate hikes are far from trivial for small businesses. Higher interest rates tighten the purse strings further, stifling the growth and prosperity of our small business sector. The potential economic fallout from high interest rates isn’t confined to balance sheets – it will affect every aspect of our society, from employment rates to consumer spending and beyond, so we urge the Bank of England to show moderation.

“However, our Small Business Index (SBI) 2023 bears witness to the indefatigable spirit of our small business community. In Q1 2023, two in five businesses said they were looking forward with optimism, expecting an uptick in sales in the next quarter. It shows that with the right support, they’re ready to hold their ground amidst the shifting sands of interest rate changes and inflation.

“That’s why policymakers need to give small firms an olive branch to navigate these difficult times by taking steps to keep finance flowing. Government should expand the scope of Small Business Rates Relief, lowering the tax burden for 200,000 small firms with premises. Meanwhile, energy suppliers should allow firms to ‘blend and extend’ their contracts, allowing them to capitalise on lower wholesale prices. Late payments should also be a top priority as unpaid invoices can make growth and stability near impossible.”