Will the Bank of England’s Interest Rates Rise in 2023?

December 22, 2022

BoE Increases the Interest Rate

Most people in the UK were surprised to hear about the latest increase in interest rates by the Bank of England. However, if you are within the finance or economic industries, you would have seen this increase coming. This is the bank’s 9th increase in a row with a 0.5% increase, making the current interest rate 3.5%.

With the ongoing inflation and the cost of living crisis, this was the last thing that business owners wanted to deal with at the end of the year. Continue reading to find out if there might be more interest rate increases in the future and how UK small and medium businesses will be impacted. 

Will the interest rates increase again?

The Monetary Policy Committee (MPC) voted by the majority (6-3) to increase the interest rate to 3.5%, whilst 2 of the 3 voters voted to keep the interest rate at 3%, and one voted to increase the interest rate by 0.75%. 

THE MPC justified this increase as a reasonable decision that will facilitate a sustainable return of inflation to a set target. They also shared that a larger increase in the interest rate should be expected in 2023, potentially reaching 4.25% and might not get cut in the next year! How will small to medium-sized businesses be affected?

Impact of High-Interest Rates on UK Businesses

Small and medium businesses (SMEs) make up 99.9% of the UK economy. How will this impact their performance in 2023? As the interest rates continue to increase, you may need to consider these areas. If you already have business credit cards or loans, then you would expect to pay at higher rates. This is highly important to acknowledge because it may affect your decision to apply for a credit card or business loan. Did you know that we can help you apply for business loans and credit cards? Get in touch to find out more.

This increase in interest rates will cause small and medium businesses to have larger overheads and lower disposable income. This may cause some businesses to be paying off the interest instead of paying off the loan!

A Financial Strategy 

What all those businesses certainly need is a solid financial foundation that can withstand the turbulent economy. As business owners, you need to be informed of your business performance in a timely manner, and what better way to stay informed than by hiring highly experienced accountants? We have accounting packages tailored to different businesses and their needs. You can buy them now on our website.

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