Will the BoE’s interest rate rise hurt my business?
How will the Bank of England’s decision to increase interest rates effect your business?
The Bank of England Monetary Policy Committee’s decision last week to raise interest rates by half a percent has certainly set media pulses racing. It’s been 10 years since the bank last announced a rise and the news has made waves across the nation.
The decision will indeed affect many people, however there is unlikely to be dramatic changes. Monthly payments for those with mortgages on a variable rate will rise modestly and savers should notice a slight return on their investment.
It’s not quite a case of nothing to see here, but it’s not far off.
Or is it?
Perhaps the biggest initial impact of the rate rise will be on consumer sentiment.
It will be interesting to see retail sales figures in the run-up to and after Christmas. Will people rein in their spending as they think more about the cost of their mortgage? It is possible that the rate rise could see us enter a frugal Festive Season from a consumer perspective.
If this turns out to be the case, the effects of the rise will be felt within the retail sector, and combined with fears about the future perhaps compounded by Brexit uncertainty, firms could be in for a bumpy ride.
In the face of such seemingly insurmountable challenges, it would appear that there is little firms can do except batten down the hatches. However, businesses can take steps to ease uncertainty, and one way of buying some peace of mind is through insurance product known as trade credit insurance.
If your business supplies a large retail brand as part of a wider supply chain, then you could be vulnerable if the Yule Tide doesn’t come in.
Taking out insurance against a risk of non-payment in the event of a client going into administration or liquidation is a sensible way of securing your business during a time of great uncertainty.
As is usually the case with business, changes are often unpredictable and unexpected and it will be interesting the see the ramifications of the rate rise in the coming months.
However, firms should prepare now and take steps to ensure that, should the worst arise, they have something to fall back on.