Bank of England increase base rate to 0.75%

Ben Skinner - Wilson Wraight

The Government has today announced that, as expected, interest rates will rise by 0.25% to 0.75%, the highest rate since March 2009. Whilst welcome for many savers, it is likely that businesses with variable rate borrowing in the form of overdrafts and loans will notice the change, which on larger debt could have implications for cashflow. However, there is no need to panic just yet as it seems unlikely that the UK will return to interest rates of 5% and above, with the Bank of England suggesting in its Inflation Report that it thinks the natural interest rate for the UK economy is somewhere between 2% and 3%. However, for those businesses with significant exposure to rate rises, it would be worthwhile reviewing whether fixed rate options might be more appropriate.