Base rate plateau is ‘a concern’

Following the Bank of England’s recent decision to keep the base rate at 5.25%, the Federation of Small Businesses (FSB) has expressed its concern about the impact this will have on small business growth and investment.

FSB National Chair Martin McTague said, ‘Yet again, the MPC has opted to stick instead of twist, a move which was widely predicted but which is no less disappointing for it. The high plateau rates are currently stuck at is now undermining growth, as small firms struggle to access affordable finance to help them expand.’

McTague stressed that although inflation is now back on target, the lack of a rate cut could hinder the fragile signs of economic recovery. ‘Holding off a cut in the base rate until a future date risks snuffing out tentative signs of a recovery in GDP, with the flat growth in April a warning sign,’ he explained.

Despite the recent higher-than-expected services inflation, McTague warned that the threat to growth must not be overlooked. He feels to do so would ‘have potentially devastating consequences for small businesses.’

The FSB is hopeful that the Bank of England will soon reach a tipping point for a rate cut, which would provide small firms with the much-needed opportunity to invest and scale up their operations. McTague concluded, ‘Small firms will be hoping that the tipping point for a cut will be reached sooner rather than later, to help them invest and scale up.’

This feeling appears to be common amongst small business owners who hope a reduction in interest rates would make it easier to access affordable finance options.

If you’re interested in funding options, or concerned about your cash flow, please get in touch. We have contacts in the field that may be able to help with finance solutions, and can help explore options aroudn your cash flow.