Firms welcome rate cut but fear new bills

Business leaders in South Staffordshire have welcomed the cuts in interest rates but say the Queen's speech lacks "medicine for the economy".

The divisional director of Southern Staffordshire Chamber of Commerce and Industry, Simon Tulitt said the 13 new bills published on Wednesday in the Queen's speech will impose more red-tape on already cash-strapped businesses in areas like welfare and flexible working. He said: "This is the first Queen's Speech during a recession for over a decade, yet there is little medicine for the economy.

"The government has brought forward proposals which will cost businesses time and money by imposing new employment legislation and by hitting them with business rate supplements. We are disappointed by the new bills."

The chamber is particularly hostile to the Business Rates Supplement Bill which could see some councils imposing supplements to business rates to fund projects to strengthen the economy in their area.

Mr Tulitt added: "The unpredictable burden of these taxes and charges should be cut with greater clarity and accountability brought in."

But he added the one per cent interest rate cut by the Bank of the England yesterday in an attempt to fend off a prolonged recession was what the chamber had been calling for, so long as the banks passed it onto businesses and the wider economy.

Mr Tulitt said: "It's important that the benefits are passed on by the banks to businesses locally in our area.

"We have some evidence from our fourth quarter economic survey local returns that the benefits of lower rates have not be passed on to our members and we have fed these examples into government via British Chambers of Commerce to take up with the banks directly at top level."

The drop has brought the cost of borrowing down from three per cent to two per cent, the lowest level for 60 year. It also follows last month's 1.5 per cent cut which was the largest single cut for more than 27 years.