Interest rate announcement offers little hope to construction

Latest News Fri, May 10, 2024 6:58 AM

The Bank of England (BoE) has announced its decision to hold interest rates at 5.25% for the sixth time, remaining at the highest level for 16 years.

This decision, although expected, will have significant implications for the construction industry.

No indication was given that rates are set to be cut later in the year, although the BoE Monetary Policy Committee (MPC) said it would ‘consider forthcoming data release and keep under review how long the Bank Rate should be maintained at its current level.’

Richard Beresford, CEO of the NFB commented, “The decision by the Bank of England to maintain interest rates continues to hinder productivity and economic recovery.

“Due to the size and nature of works, the construction industry relies on borrowing and financing for projects, and high interest rates can hamper its ability to secure strong pipelines of work and invest in growth.

“This announcement comes at a time when construction already faces considerable challenges in material inflation, planning delays, and energy costs.

“We, therefore, urge the Government to deliver greater strategic reform in planning, procurement, and regulation to ease these difficulties and create a favourable environment that allows our sector to drive investment, growth, and UK productivity.”

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