Wednesday 12 November 2014 7:49 am

Interest rate rise in 2015: This is why UK SMEs aren’t phased


I write about energy and industrials for City A.M. I'm particularly interested in geopolitics, energy policy and, of course, the ever lively oil markets.

I write about energy and industrials for City A.M. I'm particularly interested in geopolitics, energy policy and, of course, the ever lively oil markets.

Follow Jessica Morris

UK small and medium-sized businesses aren't phased by the prospect of rising interest rates, which, following comments by Bank of England governor Mark Carney this morning, market mavens now think will happen in October 2015.

Research by the Institute of Chartered Accountants in England and Wales (ICAEW) found that of the 500 small and medium-sized businesses surveyed, 78 per cent said they would not be adversely affected by a future interest rate rise.

Interestingly, over three-quarters claimed their business doesn't borrow and has cash reserves, thus shielding them from increases in borrowing costs. But despite this, just nine per cent saw a major investment in their business as an opportunity next year.

This morning, Carney said that the focus should be on monetary policy more broadly, rather than the specific date of an interest rate rise. He also slashed next year's GDP growth forecast to 2.9 per cent from 3.1 per cent.

Stephen Ibbotson, Director of Business at ICAEW, said:

Small and medium enterprises are the backbone of the economy, and it is interesting to see the vast majority are not concerned by an interest rate rise coming in 2015. Indeed, with so many not investing, or hiring, it looks like we are in a ‘wait-and-see’ period for many businesses.
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