THE Bank of England has declared that it is raising interest rates by the biggest amount in 27 years. 

Interest rates were raised from 1.25 per cent to 1.75 per cent. This is after the Bank of England warned that houses will face a 15-month recession and inflation of more than 13 per cent later this year. 

Andrew Bailey, the governor of the Bank of England, pinned this on the war in Ukraine causing the price of energy to rocket. 

This comes during a difficult year for both consumers and businesses in Cumbria.

Cumbrian businesses are preparing to weather the storm. Michelle Scrogham is the chair of Ulverston Business Improvement District (BID). The BIDs function as local representatives of business interests, and campaign for improvements to the local area that will bolster the high street. 

She is also the owner of the boutique shop Pure in the centre of Ulverston.

"A rise in interest rates will have an impact on anyone with borrowing, be that a mortgage, credit card or business loan, meaning less in their pockets to put back into the local economy," she said.

"Recessions are always very tough to trade in but on the back of Brexit and COVID over the past couple of years, this could be the toughest year yet, unless of course, you're an oil company."

She expressed doubt that either candidate in the current Conservative leadership election would cut VAT.

"They have consistently promised not to raise VAT prior to General Elections and then broken the promise and raised them once elected," she said.

About the local community, she said: "We are lucky to have such an amazing community, many of whom took a deliberate decision to shop local and support their independent shops during the pandemic." 

Suzanne Caldwell, chair of Cumbria Chamber of Commerce, said: "While in normal times raising interest rates is an effective lever in reducing inflation we’re in unusual times. Given that so much of the pressure on prices is from external factors such as international fuel prices and global supply chain problems the effectiveness of this is likely to be much more limited.

"Interest rate rises will put increasing pressure on Cumbrian businesses directly where they have borrowing."