The Bank of England has decided to hold interest rates at 5.25%.
Its Monetary Policy Committee (MPC) voted by a majority of 6–3 to maintain Bank Rate, with three members preferring an increase of 0.25 percentage points, to 5.5%.
It marks the second interest rates pause following a run of 14 increases as the Bank tried to get inflation under control.
Federation of Small Businesses (FSB) national chair Martin McTague said: “This will at least be a relief for small businesses that we seem to be at the end of continually rising rates. This means they can now strategise for growth, given that we’ve, hopefully, hit inflation’s peak.
“However, rates have got to start dropping soon as many businesses are reeling from the unwelcome effects of 14 consecutive base rate hikes. Our latest Small Business Index (SBI) has begun to show business confidence creep up, from -14.2points in Q2 of 2023 to -8 points in Q3. Now, in order for that figure to stabilise or even climb, targeted interventions are needed.
“Small businesses are really feeling the double impact of high borrowing costs and reluctant customers – an unwelcome mix in an era where the cost of doing business remains notably high.
“With the Autumn Statement on the horizon, businesses are holding their breath for supportive policies. Top of the agenda should be maintaining the 75 per cent business rates relief for SMEs in retail, hospitality, and leisure. It’s currently set to expire in March and losing it could be a knockout blow to sectors already on the ropes. It’s time the promised business rates overhaul actually happens.
“The Chancellor should also tackle the late payments issue head on by making clear that it’s not acceptable for large businesses to finance their working capital at the expense of small businesses. We’d also like to see the self-employed being able to deduct the cost of training from their taxable income. This could be a transformative policy in an era when entrepreneurs need to adapt constantly to new developments.”
