Suffolk Chamber & Bank of England meeting: improving trends, but concerns remain

Suffolk businesses took full advantage of a recent opportunity to hear from a Bank of England expert on the institution’s economic projections and forecasts for UK interest rates.

Speaking before over 80 attendees at Suffolk Chamber of Commerce’s latest Bank of England lunch, hosted by Venue 16, Kieran Dent, the Bank’s Agent for the South East and East Anglia explained that key domestic and international indicators suggested a more robust economic outlook over the short to medium-term compared with the recent past.

The Bank’s modelling showed that household real incomes are likely to move upwards, as will prices and investment in the important housing sector, whilst employment and unemployment levels are likely to remain largely stable.

Inflation more generally, using the CPI measurement, is projected to continue its downward trajectory from 2.2% in the current quarter to 1.8% by the third quarter of 2026.

Linked to this movement, the institution estimates that the Base Rate will drop from 5% to 3.9% over the same period which will be welcome news for business borrowing options as well as consumers.

This more optimistic outlook is broadly reflected by the trading realities of Suffolk Chamber’s members as recorded by its latest Quarterly Economic Survey (QES) findings.

The QES for the period April to June 2024 showed positive corrections compared with previous quarters’ declines in most key activity indices for manufacturers, with domestic sales, export sales and export orders all on an upward trajectory.

However, contrary to the Bank’s findings, concern over inflation increased in the second quarter and remains the primary issue for Suffolk businesses, with 57% of firms seeing this as a worry. Despite this, intentions to raise prices among Suffolk respondents fell sharply in in the second quarter, with the percentage of Suffolk manufacturers intending to raise their prices is at its lowest level since the fourth quarter of 2020.

Worries over corporate taxation hit multi-quarter highs.

Matt Moss, chair of Suffolk Chamber’s Economy Panel, said: “I think everyone who attended the event came away both better informed and somewhat more optimistic by what they heard from Kieran.

“Overall, the trading picture looks more positive than it has for well over a year or so. There are still some challenges ahead, of course, but a period of political stability will be good for the economy and businesses. With some global factors still influencing the economy the overall prospects remain somewhat unpredictable, but those factors inside out control are at least in a good place.

“However, Suffolk Chamber is taking nothing for granted and will continue to monitor the real-life trading realities and future prospects of our members via the QES. We are current conducting the fieldwork for the third quarter and would urge all Suffolk Chamber members to take the time to complete it, so that we can boost response levels and with real confidence share the findings with the Bank, HM Treasury and other national decision-makers.”