WITH the Bank of England deciding to raise interest rates to 0.75% in order to curb inflation that’s expected to hit 8% by Q2, the Federation of Small Businesses (FSB) says it will impact businesses with higher debt costs.
Reacting to the rise in interest rates, Martin McTague, national chair of the FSB, said:
“The economic consequences of the pandemic are still being felt by small businesses, whose ability to make up for lost time and income has been undermined by a vicious cycle of rising costs.”
He added that while some sectors of the economy could respond with prices rises, this wasn’t universal. There was further pressure with the cost-of-living squeeze intensifying, while fuel costs at record prices and ever increasing utility bills meant disposable income was quickly reducing.
“Small businesses increasingly feel that the government is indifferent to the cost pressures they face.
“The planned hikes to national insurance and dividend taxation taking effect in a matter of days, alongside an income tax threshold freeze, will, for many, be the final straw.
“This week’s Spring Statement is the government’s last chance saloon to mend relations.
“Increasing the Employment Allowance, upping the small business rates relief threshold on rates, and taking action on surging fuel and utility bills would all help.
“ ‘Pay as you grow’ options to spread the pressure of debt repayments should be opened up to users of other state-backed loan schemes beyond just bounce-backs.
“We urgently need to see the Chancellor ease the pressure on the five and a half million small firms and sole traders on which our recovery will depend.”
Automotive and fleet writer for Broker News