London businesses fear inflation will hit progress

Two thirds of London businesses are concerned that inflation and high interest rates will dampen economic activity in the first half of 2024, according to a quarterly survey from the London Chambers of Commerce and Industry (LCCI). The survey also shows that a majority of those polled saw fuel and energy costs increase in Q4…

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Interest rates predicted to be cut in May

22nd January 2024 Consumer Lending | #interest rates

The EY Item Club predicts that UK interest rates will start to be cut in May, as inflation is expected to fall to the Bank of England’s 2% target by that time.  It is predicted that the UK’s prolonged period of economic stagnation should begin to fade this year as falling inflation, potential interest rate…

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Interest rates hold at 5.25% – consumer credit industry reaction

15th December 2023 Consumer Lending | #interest rates

The Bank of England has announced that interest rates will be held flat at 5.25%. The MPC voted 6-3 to hold rates steady, with dissenters preferring to raise rates by 0.25% to 5.5% Responding to the news Change Debt Charity that the hold will be worrying for households yet to secure a new fixed-rate mortgage…

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Interest rates won’t be cut until 2026

13th December 2023 Business Lending | #interest rates

The Confederation of British Industry (CBI) does not expect the Bank of England to cut interest rates until 2026, predicting that the base rate will stay at 5.25% for at least two more years. The CBI’s forecast is based on projections showing that consumer price inflation will not reach the Bank’s 2% target until Q3…

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Interest rate announcement causing business anxiety

8th December 2023 Business Lending | #interest rates

The monthly Bank of England base interest rate announcement causes increased anxiety to two thirds of SME business owners according to a new study from Recognise Bank. The SME Mental Health Report 2023 surveyed the areas of business and events that have a significant impact on mental health, with the monthly announcement affecting 66.4% of…

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Bank rate maintained at 5.25% – business industry reaction

The Bank of England’s Monetary Policy Committee voted in favour of leaving the base rate at 5.25%. Governor Andrew Bailey insists rates needed to be held high to squeeze inflation out of the economy. In its latest forecast, the Bank cut expectations for UK growth to zero, down from a previous prediction of 0.5%, while…

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Higher interest rates a positive and a negative for consumers

19th October 2023 Consumer Lending | #interest rates

The EY ITEM Club forecast presents a mixed picture for consumer spending, which is expected to benefit from several supports. Although pay growth is expected to ease, inflation should decline more quickly. Falling energy bills, easing food price inflation and weaker pipeline price pressures mean inflation is predicted to average 7.4% this year (down from…

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Call for Bank of England to stop raising interest rates

With the latest labour market statistics, showing a 0.5 percentage point quarterly rise in unemployment in the three months to July, the Institute of Directors is calling on the Bank of England to stop raising interest rates. Kitty Ussher, Chief Economist at the Institute of Directors, said “With today’s data showing a weakening labour market,…

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Interest rate surge delivers biggest wealth fall since World War II

Rising interest rates have caused household wealth across Britain to fall by £2.1 trillion over the past year, but there are winners – concentrated among younger generations – as well as losers if higher rates are sustained, according to major new analysis by the Resolution Foundation and abrdn Financial Fairness Trust. The report notes that…

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Retail resilience challenged by higher interest rates

Retail sales shrugged off the expected drag from May’s extra bank holiday, rising for the second successive month however the EY ITEM Club is predicting that persistent inflationary pressures and rising mortgage costs mean a sustained retail renaissance is unlikely in the near-term, with sales growth set to remain slow throughout this year. Low unemployment…

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Soaring mortgage rates will cost 1.4m a fifth of disposable income

Higher mortgage costs will mean almost 1.4 million households will need to spend at least 20% of their disposable incomes on repayments. According to the Institute for Fiscal Studies, in March 2022, households with a mortgage were spending an average of £670 per month on payments, £230 of which was interest. Now, mortgage-holding households face…

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Average two-year mortgage fix now exceeds 6%

New data from Moneyfacts has shown that a typical two-year fixed mortgage deal now has an interest rate of more than 6%. The data shows that the average rate for a two-year fixed-rate mortgage has hit 6.01%, while a typical five-year fixed rate is now at 5.67%. The two-year rate has risen from 5.98% at the…

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Interest rate rise will mean that repayments are £529 per month higher that before hike series

New research by TotallyMoney has predicted the impact of the Bank of England’s hiking interest rates by a further 0.25% (to 4.75%) on borrowers with a variable rate mortgage head of the next MPC announcement on the 22nd of June. The research found that for the average UK property costing £270,708 with a 75% LTV,…

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