Growth figures raise chances of rate rise
The UK’s economy is getting stronger. According to the latest Office for National Figures statistics, we had a higher than expected growth in the three months through to September. This in turn could lead to a rise in interest rates in November.
If these interest rates are indeed risen when the Bank of England Monetary Policy Committee meets in November, this would be the first since 2007.
Ian Stewart, chief economist at Deloitte, commented: “Today’s growth figures show that, despite the Brexit headwinds, UK growth is good enough to give the bank the green light for a rate rise next Thursday.”
This rise will however shine the light on our businesses. The Institute of Chartered Accountants in England and Wales (ICAEW) is urging that complacency may have set in over the eight years of historically low rates. Matthew Rideout, ICAEW Director of Business, warned: ” A series of interest rate rises may have an impact on small businesses, increasing overall business risk “. Businesses should ensure their cash flow is managed tightly.
Tej Parikh, Senior Economist at the Institute of Directors, said: “Although it is just a first estimate, GDP growth rising to 0.4% between July and September should be welcomed as a sign of resilience in British businesses.
Parikh adds: “And, with businesses facing higher costs, skills shortages, and uncertain revenues, the Government must ramp up investment support for businesses in its forthcoming Budget – alongside providing much-needed clarity over the Brexit process, to help build on the underlying resilience in the economy.”
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