Businesses welcome 'desperately needed' interest rates cut

The Bank of England lowered rates to 5pc from 5.25pc on Thursday, the first drop since the start of the pandemic in March 2020. 

Interest rates dictate the cost of borrowing set by banks and money lenders, so the cut was welcome news for small businesses and homeowners who have experienced rising mortgage payments. 

The Bank forecasts that inflation will increase to about 2.75pc later this year, before returning to its 2pc target next year.

Source: Bank of England (Image: Bank of England)

Candy Richards, the Federation of Small Businesses' development manager for East Anglia, said the cut gives the region's small businesses hope that the economy is moving in the right direction. 

“This interest rate cut was desperately needed by our region’s small businesses," she said. 

"The prolonged plateau of high rates has put small businesses under considerable pressure – both in terms of accessing affordable finance and the impact on household spending.

“Today’s cut to 5pc will not reverse or immediately stem the financial pain, but it does give our small businesses some hope that, finally, things are moving in the right direction."

Candy Richards, Federation of Small Businesses development manager for East Anglia (Image: Supplied)

She said many small businesses have struggled and ceased trading due to the "cost of doing business crisis".

"The government must build on this momentum to act decisively to end poor payment practices and close the regulatory gap on personal guarantees which leaves so many small business owners fearing for their homes when they take a risk to grow their business," she added.

“The government has stated that unlocking economic growth is their goal and the region’s 568,000 small businesses will play a vital role in realising this ambition.

"But small firms can only invest and grow by being able to get the funds they need, at an affordable rate, to put their plans into action.”