Chief Executive Officer
Placing further financial strain on businesses will cause widespread damage to the UK economy, warns Time Finance, as the Bank of England announces its sharpest increase in interest rates in 25 years in a bid to combat rising inflation.
The caution comes as the Bank of England increases its interest rate by 0.5% to 1.75%, a move that will have a detrimental impact on UK business confidence when the challenge of rising costs continues to worsen.
Ed Rimmer, Chief Executive Officer at Time Finance, commented:
“The latest interest rate rise is simply another blow to business confidence and places even more financial strain on our economic recovery as we continue to grapple with rising costs.
“There are arguable benefits to this move from the Bank of England as it has faced mounting pressure to keep up with the pace of global central banks, but it is short sighted. We know that an interest rate rise alone cannot curb inflation; the challenges around soaring costs need to end somewhere because for UK businesses this simply isn’t sustainable. The IMF recently adjusted its predictions for UK growth in 2023 to just 0.5% compared with the predicted 1.2% earlier this year. So, the big question here is what will happen to these figures if Government intervention doesn’t happen soon? Well, for many businesses it will slow down growth, making the impending recession a self-fulfilling prophecy. Instead, we need action that stimulates economic growth.
“Few businesses have the luxury of using their own capital to finance investment, and for some, it isn’t enough to manage day-to-day expenses, like paying their own suppliers, HMRC or employees. That’s a worrying outlook.
“Already we’re seeing demand for finance rise, as business concerns grow over the possibility of a recession. Many, who were trading around the time of the last recession know just how challenging this can be and will fear that traditional lending routes, like the highstreet Banks, will close their doors once again and withdraw their support.
“The role of alternative finance has for a long time filled a void in supporting SMEs where some lenders have fallen short in challenging economic markets. Business appetite for growth doesn’t dwindle simply because some funders have tightened the purse strings. Businesses need and deserve funding partners who are available to listen and really understand their concerns, not turn their backs when the going gets tough. No one is in any doubt that borrowing must be done responsibly, wisely and at the right time but without it, the economic growth the UK desperately needs simply won’t be achievable.”