Chief executive officer
Putting more financial pressure on businesses will cause massive damage to the UK economy, warns Time Finance, as the Bank of England announces its biggest interest rate hike in 25 years in a bid to combat rising of inflation.
The caution comes as the Bank of England raises its interest rate by 0.5% to 1.75%, a move that will negatively impact UK business confidence as the challenge of rising costs continues to mount. get worse.
Ed Rimmer, managing director of Time Finance, said:
“The latest interest rate hike is just another blow to business confidence and puts even greater financial pressure on our economic recovery as we continue to battle rising costs.
“There are questionable benefits to this move by the Bank of England as it has faced increasing pressure to keep pace with global central banks, but it is short-sighted. interest rates alone cannot curb inflation, the challenges of soaring costs have to stop somewhere, because for UK businesses it is simply not sustainable.The IMF recently adjusted its forecast for UK growth in 2023 at just 0.5%, down from 1.2% predicted earlier this year.So the big question here is what will happen to those numbers if the intervention of the government isn’t happening soon? Well, for many businesses, this will slow growth, making the impending recession a self-fulfilling prophecy. Instead, we need actions that spur economic growth.
“Few businesses have the luxury of using their own capital to fund investments, and for some this is not enough to manage day-to-day expenses, such as paying their own suppliers, HMRC or employees. It is a worrying prospect.
“We are already seeing the demand for financing increase, as companies worry about the possibility of a recession. Many, who were trading during the time of the last recession, know how difficult it can be and will fear that traditional lending avenues, such as the big banks, will once again close their doors and withdraw support.
“The role of alternative finance has long filled a void in supporting SMEs where some lenders have failed in difficult economic markets. The corporate appetite for growth is not diminishing simply because some lenders have tightened the purse strings. Companies need and deserve financial partners who are available to listen and truly understand their concerns, without turning their backs on them when the going gets tough. No one doubts that borrowing must be done responsibly, wisely and at the right time, but without it the economic growth the UK desperately needs will simply not be achievable.