Small firms still not prepared for rate rises

 
Tim Wallace
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BRITAIN’S small firms worry that an interest rate rise is a threat to their business, despite the Bank of England’s promises that any hike will be small and slow.

Two-thirds of small- and medium-sized enterprises (SMEs) are concerned about the idea of monetary tightening, a study by Lloyds Bank found, as the era of rock-bottom interest rates could come to an end over the coming years.

That level is also matched by the 68 per cent of SME bosses who are concerned by the risk of inflation taking off once more.

Meanwhile, 59 per cent are concerned about commodity price risks, and 56 per cent are worried about foreign exchange movements.

“The expected boost to consumer spending from falling oil prices means that an interest rate rise is still likely at some point over the next 12 months. Businesses need to be alert to this risk,” said Lloyds Bank commercial banking’s chief economist Trevor Williams.

“The good news is that the fall in oil prices will also boost growth, and it is notable that the Bank of England revised up its GDP growth forecast for 2015 and 2016. Business confidence about the prospects for the UK economy remains strong.”