The Bank of England's decision to maintain the base rate at 5.25% has raised significant concerns among small business owners. The Federation of Small Businesses (FSB) has voiced its apprehension about the potential impact on small business growth and investment.
Concerns Over High Base Rates
Martin McTague, the FSB National Chair, expressed his disappointment with the Monetary Policy Committee's (MPC) decision to maintain the high base rate. He highlighted that while the decision was anticipated, it is nonetheless detrimental to small businesses. "The high plateau rates are currently undermining growth as small firms struggle to access affordable finance to help them expand," McTague stated.
Economic Recovery at Risk
Although inflation is now back on target, McTague emphasized that the lack of a rate cut could stifle the fragile signs of economic recovery. He pointed out that the flat growth in April is a warning sign, indicating that delaying a rate cut might "snuff out tentative signs of a recovery in GDP."
Impact on Small Businesses
Despite higher-than-expected services inflation, McTague warned that ignoring the threat to growth could 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 necessary opportunity to invest and scale up their operations.
A Call for Accessible Finance
This sentiment resonates widely among small business owners who are looking for more favourable financial conditions to drive their growth and sustainability. Accessible and affordable finance is vital for the continued success and expansion of small businesses.
We Are Here to Help
At Rushtons, we understand the challenges small businesses face in the current economic climate. If you would like to discuss your business finances in light of these developments, please do not hesitate to contact us. Our team is here to support you and provide tailored advice to help navigate these uncertain times.
For more information, read the full article from the FSB: Base Rate Plateau Risks Stifling Growth, Say Small Firms.