A RISE in interest rates in the coming year could push thousands of small businesses into bankruptcy, insolvency expert Begbies Traynor warned this morning.
In its first quarter “Red Flag” update, which monitors UK companies for signs of stress, Begbies said small and medium-sized enterprises (SMEs) had £55bn of liabilities on their books.
The debts – typically owed to suppliers and service providers – would become difficult to maintain if the Bank of England’s rate rose by one per cent, the research group said.
Chief executive Ric Traynor warned a mass-default by SMEs would seriously threaten the fragile economic recovery beginning to slowly spread across the country.
Traynor added: “A [rate] rise may tip more struggling businesses over the edge... especially in the embattled but vital SME sector which cannot afford the protection of sophisticated interest rate hedging.”