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LThe week cutting of the AST Week of the Base Interest Rate of the Bank of England (BOE) at 25 basic points was largely seen as a step in the right direction, since the United Kingdom seeks to improve productivity and Growth, even if some wanted a faster and more powerful impulse by duplicating the cut.
The BOE continues to doubt inflation the opportunity to increase again, so it will not reduce interest rates too fast, but the reimbursements of the mortgage and the lowest loan rates were the great victories to carry for the public sectors and commercial equally.
However, not all companies seem to see significant benefits of rates cut. Or, perhaps with greater precision, the benefits they will receive from interest rates that fall to 4.5 percent is a mere fall in the ocean along with other cost pressures that they still face in recent years, and those that are advanced.
There are about five and a half million small to medium -sized companies (SME) in the United Kingdom, widely defined as such having less than 250 employees and a turnover of less than € 50 million.
The governments of the time often announce them as vital parts of the economic growth of the nation, but due to their relative financial size and positions, they can also be some of the companies most affected by changes in regulations or costs.
While lower indebtedness costs are positive for those who try to expand operations or reinvest in their own companies, a much broader range of SME is fighting a growing tide of problems that have no voice to make or undo.
The Federation of Small Business, a United Kingdom organization that campaigns for the SME community, has asked the lenders to pass the interest rates quickly so that companies can “think about growth and future plans, instead of Only survival. “
President Martin Mctague added that the lowest indebtedness costs could “encourage small businesses to risk a new team, larger premises or a training course to expand their skills [which can] It helps to offer the economic growth that we all want and need to see. “
But others point out that the rate drop is not just close enough to have a significant impact.
It costs abundant on one side, a single cut in the other
Unity Trust Bank works with beneficial organizations, unions and other organizations to offer positive social change. Josh Meek, impact director, said that, although it took the time when the street banks transmitted interest rates increases on the road up, decreasing could be a different matter.
That will not benefit the savers, but it will be better for the borrowers, although among the SMEs, business confidence has been low and, therefore, reinvestment in the midst of such uncertainty.
“A reduction in the interest rate of the Bank of England occurs when the country is trying to stimulate national growth and encourage companies to spend more,” he said.
“The barriers to trade and the expectations of the rates market will continue to influence the confidence of the indebtedness, and the next impacts of salty salary increases, the increases in national insurance and global trade have not yet been recognized.
“Many of the SMEs we work with still feel the impact of high inflation between 2021 and 2023.
“While the cost of loans for those in variable rates will also be lower, we must still consider the impact within the context of broader economic health and the uncertainty of doing business in the country. UK Finance's report on SME loans shows a mixed image about loan confidence. 2023 saw five consecutive quarters of reduction in the indebtedness of SMEs with an unequal recovery in 2024 in the sector, size and bank loans. ”
Tariff uncertainty
While the tariffs for the United Kingdom exported to the US. UU. They are not yet in their place, that does not mean that small businesses are not affected by them. The products that are made in China, for example, and then are sent or ended in the United Kingdom and then sold in the United States are still subject to rates.
Adding significant costs can see companies lose customers, while swallowing additional costs in themselves hurt profitability.
Amaan Parmar works in Bizspace, a flexible work space company that sees SMEs as part of its customer base.
They noticed that the rate cut was “undoubtedly a welcome step” for the economic growth policy of the Labor Government and long -term stability, but suggested that there was little immediate and remarkable impact for SMEs.
And with national insurance and minimum wage costs that will increase by 1.2 percentage points and 6.7 percent respectively, it is clear that a cut of 0.25 percentage points in an expense simply will not have enough tangible effect.
“He did little to address the immediate impact on small businesses that already struggle to keep their businesses afloat in the current economic climate,” they said.
“Many intelligent consumers who are with additional income to spend will actively seek independent retailers or family businesses, and from the devastation of the Covid pandemic, they tend to see the small, local and independent survivors such as the act of economic growth within their communities regional
“But SMEs will continue to err for caution in the coming months as we approach April and the new fiscal year, when significant budgetary changes enter into force.
“The next reduction to the relief of the commercial rate from 75 percent to 40 percent has also been a significant concern for those that run small businesses within the hospitality, retail and leisure sale sectors.”
Out of business
Nor is it only about businesses, with beneficial organizations and other organizations in the social sector that still have difficulties. The small falls of interest rates do not necessarily affect positively enough in those who use their services, so the demand continues while the costs are increasing.
Mr. Meek of Unity added: “The Charisies AID Foundation has found that 86 percent of beneficial organizations and organizations provide critical services for vulnerable people have experienced an increase in demand. Meanwhile, 50 percent said the competition for funds was at the end of many cuts to share with their workforce, which makes it difficult to service the needs of their communities.
“It is unlikely that changes in the base rate relieve the demand that these organizations are seeing soon, since they continue to feel the impact of financing reduction, the increase in costs and the greatest uncertainty.
“However, if the reduction of the rate is an indicator of steps to stabilize inflation and address the challenges of life cost, this should allow key services to support communities throughout the United Kingdom to obtain a better base to serve the most needy. “
As is evident, the trimming of the interest rate is a small step along the way where the United Kingdom wants to be from an economic perspective, but it is far from being an immediate solution to the problems that many face.
