Is a rate hike coming?

When the Bank of England’s (BoE) Monetary Policy Committee met in September, they voted unanimously to keep base rate at 0.1 per cent.

It has been at this emergency level for 18 months, since March 2020, but for how much longer?

Inflation, one of the BoE’s key considerations, is well above its two per cent target somewhat fuelled by supply chain challenges.

Any increase to base rate is likely to be incremental but what would it mean for businesses? The cost of borrowing will increase unless you have a fixed interest rate.

Many small and growing SMEs rely heavily on debt for both survival and growth and they may see their interest costs going up, negatively impacting cash flow and stunting growth.

So, what can you do to prepare? Revisit your business plan and forecasts, consider various scenarios with your accountant, and make sure you have ample cash on hand for your plans.

Should you require finance, now might be a good time to speak to your bank or alternative lender about what’s available on a fixed basis.

One thing is for certain, base rate is only going to increase from its current low, the only question is when.

• To read this feature in full and access further Lancashire business news, advice and analysis subscribe to Lancashire Business View magazine or join the LBV Hub from just £2.50 per month. Click here to subscribe now.