After months of uncertainty, the Bank is expected to finally raise interest rates. A hike was expected back in May this year, but due to certain economic downturns, it was discouraged. With both unemployment and inflation steady, and Brexit uncertainty easing, the current landscape has been deemed an acceptable platform for higher interest rates. The subsequently increased expense in borrowing will make debt less affordable, and hopefully, reduce the numbers of firms in financial distress. This should encourage greater fiscal responsibility from consumers and businesses alike, and brighten the financial landscape as the UK edges closer to the Brexit deadline next year.
British business is struggling under the weight of low profits and political uncertainty, but higher rates will hopefully encourage more firms and individuals to free themselves of debt. After all, bank loans and high street lenders are not the only way to receive an injection of cash, with credit managers and debt recovery professionals providing the cash and the expertise to attain a strong financial future.
At the Credit Protection Association, we provide financial support to business owners who are strapped for cash or merely looking to expand. If rates are indeed hiked as expected, business owners will be no longer able to postpone financial distress through credit or bank loans. Instead, CPA involvement and debt recovery services will approach the issue directly.
Amid solid economic data and recent hints from policymakers, market expectations of a quarter-point rise have increased to about 90% — meaning the pound is likely to tumble if the Bank’s monetary policy committee (MPC) holds steady on Thursday.
The expected rise to 0.75% would mark the highest level for Bank rate since it was cut to 0.5% in March 2009 in a bid to contain the fallout from the global banking crisis.
“The labour market is strong, and the MPC has made a pretty solid commitment to steady increases,” said Brian Hilliard, chief UK economist at Société Générale. “We are beyond the period of the type of emergency measures we’ve seen since the crisis.”