Credit, Collections & Insolvency News
The Bank of England Monetary Policy Committee (MPC) has voted to hold interest rates at 4.0%. The MPC voted 7 to 2 in favour of the hold, with two dissenting member preferring to cut rates by 0.25% to 3.75%.
Commenting on the MPC’s decision not to change the Bank Rate from 4.00%, George Lagarias, Chief Economist at Forvis Mazars said “No news is bad news, for a stagflationary economy. Maintaining interest rates is probably a wise decision, as inflation doesn’t seem to abate. The real news came from the decision to slow Quantitative Tightening. This is an acknowledgment that conditions for UK debt are difficult, and that they could ease if the supply of bonds is somewhat reduced.”
Anna Leach, Chief Economist at the Institute of Directors, said “The MPC’s 7–2 vote to hold Bank Rate at 4% is the right call. With CPI inflation expected to edge up to 4.0% in September, food inflation climbing towards 5.5% by the end of the year, and elevated inflation expectations, the Bank cannot afford to ease its grip on price stability.
“November’s decision, however, will be a tricky one. Business confidence and hiring remain under pressure as we head towards a difficult Budget with a substantial fiscal hole to fill. At the same time, firms continue to face acute cost and pricing pressures following the rise in employment costs. Given the UK’s recent inflation history, the priority must remain to squeeze out any remaining price pressures.”
Neil Rudge, Chief Banking Officer, Commercial, said “The latest news from the Bank of England is likely to leave UK SMEs disappointed, though not entirely surprised, given last month’s persistently high inflation figures.
“Experts remain divided on how quickly the MPC might cut interest rates, with forecasts varying and growing uncertainty over whether there will be a further reduction this year. Business owners will be hoping momentum is heading in the right direction, and as rates fall, SMEs could benefit from lower borrowing costs, making previously shelved expansion plans more viable in the new year.
“Beyond tracking the shifting macroeconomic landscape, SMEs will also be keeping an eye on the upcoming Autumn Budget. Our latest research indicates that nearly a quarter (24%) of business leaders in the UK feel that SMEs are only a low priority for the government, highlighting that business owners want to see more action to support economic growth.”
Mike Randall, CEO at Simply Asset Finance said”Flat rates will be welcomed for now, but rising employer costs and uncertainty around November’s Budget could create a challenging backdrop for SMEs. If unaddressed, these factors risk holding back confidence if businesses are left guessing about the direction of travel.
“Nevertheless, for SMEs it remains business as usual – adapting, investing, and focusing on the long term – with a noticeable rise in the number of businesses turning to asset finance to manage costs and unlock their growth. What business leaders need now is clarity and stability from policymakers, so that short-term resilience can be translated into sustained growth and investment for the future.”
