The Bank of England raises interest rates - the business community reacts

The Bank of England has today announced a further 0.5 per cent point interest rate hike making it the ninth consecutive rise as the Bank of England attempts to combat inflation.

The latest changes to interest rates, made by the monetary policy committee (MPC) takes interest rates to 3.5 per cent, a level unseen since the 2008 financial crisis.

As the nation reckons with interest rate hikes, we hear from members of the business community to find out more about the impacts of this decision.

Mohsin Rashid, an established expert on personal finance and the consumer-business cycle had this to say: “Another interest rate announcement. Another reckoning. Another sign that this Christmas will be far from normal. 2022 ends with a final sting for homeowners, businesses, and individuals relying on credit to get by. This won’t come as a surprise, but it will hurt, nevertheless.

“As we enter 2023, I encourage everyone to take full advantage of the tools at their disposal. Seek the information on ways to save. Seek the platforms that deliver cash back. With snow falling, many have lost sight of a White Christmas, seeing only bitter cold.”

Douglas Grant, group CEO of Manx Financial Group PLC believes this latest rise in interest rates should be a real wake up call for SMEs adding: “A rise in interest rates was expected despite fears the UK is falling into recession and has reached the highest level since October 2008. This week’s slowing inflation data suggested that we may have reached a peak but still represented eye watering numbers and indicate that the start to 2023 will be difficult for many SMEs.

“We believe that demand for working capital will continue to rise as businesses desperately require liquidity provisions to counteract supply chain issues, increases in wages and a worsening cost-of-living crisis. Our research revealed that over a fifth of UK SMEs that required external finance over the last two years, were unable to access it.”

Commenting on the impact the Bank of England’s decision will have on homeowners, director of Benham and Reeves, Marc von Grundherr, commented: “This will be as welcomed by homeowners as the proverbial lump of coal on Christmas morning, with those on variable rate products now facing yet another immediate increase in their monthly mortgage payments.”

However, focusing on the light at the end of the tunnel, Ian Stewart, chief economist at Deloitte, said: “The Bank of England has probably done about 80% of the monetary tightening it needs to do in this cycle. A major tightening of monetary policy is feeding through the system and will act as an increasing drag on growth in 2023.”

By Mark Adair – Correspondent, Bdaily

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