The Confederation of British Industry (CBI) revealed on Sunday that its members do not expect to realize any business growth over the next three months. While most members reported above-average returns for the three months ending July, the skyrocketing cost of living and subsequent repression of customer demand has led to a lack of confidence among business owners.
In an effort to combat surging inflation, the Bank of England (BoE) introduced its highest interest rate since 1995 on Thursday, raising the rate from 1.25% to 1.75%. Inflation is currently standing at a 40-year high of 9.4%.
With a 40% rise in regulated energy tariffs expected to be introduced in October, the BoE has warned that the British economy is most likely to contract later on this year.
The CBI expects manufacturers to continue experiencing slow growth in the near term, while consumer services and retail businesses are expected to lose a significant volume of sales.
“This is unsurprising, given that strong inflation has been pushing real wages down sharply, and consumer confidence is at an all-time low,” the CBI stated in its report.