Buckinghamshire Business First and the Bank of England hosted their latest Panel Meeting at Wycombe Wanderers Football Club.

The event brought together a select group of local business leaders to engage directly with Kieran Dent, the Bank’s South East Representative. The session provided a valuable opportunity to share real-time business insights and explore the latest economic outlook.

Economic Outlook Overview

Kieran opened with a summary of the Bank’s latest monetary policy report economic forecast, with his presentation focusing on three key area:

1. Outlook for Demand: The global economy is expected to slow from 2% to around 1% growth for the remainder of the year, influenced by rising trade barriers and geopolitical uncertainty. The UK, as a small open economy, remains exposed to these global trends (Chart 2.1–2.3). Domestically, the economy has been broadly flatlining, with sentiment and uncertainty acting as key drags on investment (Chart 2.9).
2. Labour Market Trends: The labour market has shifted from an employee-driven to an employer-driven environment, with vacancy-to-unemployment ratios declining (Chart 2.13). Wage growth, having peaked at 8%, is now moderating, with private sector pay growth around 4% and expectations settling at 3% (Chart 2.16). A modest rise in unemployment from 4% to 5% is anticipated.
3. Inflation and Interest Rates: While inflation has eased, particularly in energy and goods, services inflation remains elevated (Chart 2.19). The Bank voted to hold interest rates in May, citing progress toward the 2% inflation target but noting persistent wage pressures.

The presentation of the Monetary Policy Report June 2025 is available here.

Business Insights and Discussion

Attendees shared a range of perspectives on current trading conditions:

• Sentiment and Investment: Business confidence remains subdued, with many citing high interest rates, cash flow constraints, and reduced access to finance as barriers to growth. Several businesses reported being unable to secure overdrafts or facing unsustainable lending terms.
• Labour and Skills: Rising employment costs and wage compression, due to minimum wage increases, were highlighted. Some firms reported freezing pay or reducing headcount. Concerns were raised about the long-term impact of artificial intelligence (AI) on skilled employment and the need for agile leadership to adapt.
• Trade and Tariffs: Exporters, particularly in the engineering and film & TV sectors, noted challenges from US tariffs and regulatory uncertainty. Some have withdrawn from US markets entirely.
• Sector-Specific Challenges:
  • Construction and Real Estate: Rising retrofit costs and planning delays are stalling investment.
  • Retail and Hospitality: Tight margins and reduced footfall are prompting business exits.
  • Public Sector Procurement: A lack of innovation and risk appetite in procurement processes is limiting SME participation.
• Access to Finance: Multiple attendees cited difficulties securing funding, with some turning to high-risk lenders. The impact of COVID-era loans and high interest repayments continues to weigh heavily.

Forward Outlook and Reflections

While the tone of the discussion reflected ongoing challenges, there was also cautious optimism. Businesses are adapting, exploring AI-driven efficiencies, and some are securing new opportunities through sustainability credentials and innovation.

The Bank acknowledged the complexity of the current environment and reaffirmed its commitment to listening to regional voices. Kieran noted that while the economic picture remains finely balanced, the Bank continues to monitor sentiment, productivity, and policy impacts closely.

Discussion Highlights

Business Sentiment and Investment

• BBF shared findings from its latest Business Barometer Survey, for Q2 2025, echoing the Bank’s findings: confidence is low, and investment intentions are weakening.
• Representatives from the real estate sector highlighted cash flow fragility, with delayed payments and rising retrofit costs impacting viability.
• Business support providers noted that many business owners are freezing pay, cutting staff, or accelerating exit plans due to tight margins and high costs.

Access to Finance

• Several participants reported challenges securing overdrafts or loans, with some turning to high-interest lenders. One business noted that businesses are being pushed toward risky finance options.
• Representatives in B2B services observed that access to finance is a major impediment to growth, particularly for SMEs and those with overseas parent companies.

Trade and Tariffs

• Engineering sector businesses reported avoiding US exports due to tariffs. The film sector is also being impacted in Buckinghamshire. Representatives noted that uncertainty in global trade policy is deterring investment.

Labour and Skills

• Participants discussed the impact of wage compression due to minimum wage increases and the challenge of recruiting amid unrealistic salary expectations.
• Concerns were raised by businesses about AI’s long-term impact on the labour market. The Bank views AI as labour-augmenting rather than labour-reducing.

Sustainability and Innovation

• One business shared a positive example of winning a major client due to strong environmental credentials.
• Participants expressed frustration with public sector procurement processes that stifle innovation and fail to reward entrepreneurial approaches.

Sector-Specific Observations

• Construction and real estate: Rising costs and planning delays are stalling development.
• Retail and hospitality: Footfall remains low, and margins are under pressure.
• Professional services: Clients are cautious, and international tax changes (e.g. US Section 88) are creating uncertainty.

Closing Reflections

Participants acknowledged the resilience of the business community but emphasised the need for clearer policy direction, improved access to finance, and support for innovation and skills development. The Bank reaffirmed its commitment to listening to regional voices and welcomed continued engagement through these panel sessions.

Do you want an issue raised on your behalf?

There are only a limited number of spaces available to attend these Bank of England Panel Sessions – but if you have a point that you would like to be raised at the next meeting on your behalf, you can let us know by completing this short form.

Want more research and analysis on Buckinghamshire's economy?

Visit our dedicated Reports and Analysis webpages for the latest insights on the Buckinghamshire's economy and workforce, and the effect of policy decisions on our local business community.