Bank of England cuts interest rates for first time since 2020

SMEs have welcomed the news that the Bank of England has made the decision to cut interest rates in a 5-4 vote.

The base rate has now been cut from 5.25% to 5%, which is the first drop since the start of the pandemic in March 2020.

Commenting on the announcement and explaining how much this will benefit the UK’s smaller sized businesses, Federation of Small Businesses (FSB) National Chair Martin McTague, said, “This rate cut was desperately needed, and small firms will give it a warm welcome as a harbinger of more cuts yet to come.

“The base rate’s previous high plateau placed huge pressure on small firms, adding to a difficult operating environment which has been making it far too hard for small firms to grow. Today’s cut will not reverse or immediately stem the financial pain, but it signals that – finally – things are moving in the right direction.”

Martin added, “Small firms have been telling us for some time that it is hard for them to access affordable finance, an issue which is a significant barrier to growth – every finance application that is denied, or every loan request that isn’t submitted in the first place due to high interest rates or pessimism about the state of the lending market means a missed opportunity for investment and expansion.

“There is a place for the Government now to act decisively so small firms can be confident in borrowing money to invest – that means taking decisive action to end poor payment practices and closing the regulatory gap on personal guarantees which leaves so many entrepreneurs fearing for their homes when they take a risk.

“Unlocking economic growth is the Government’s stated goal, and ensuring that small businesses with big dreams for the future are able to get the funds they need to put their plans into action is a key component of stimulating the economy.”

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