After this week’s interest rate hike to 5.75%, UK businesses are predicting further increases to interest rates throughout the year.
In research conducted by Orange Business Services, nearly half (46%) of small businesses predict that interest rates will be 6% or above at this time next year. Only 5% believe that rates will be less than 5%.
However, business owners are not overly troubled by the predicted rise in interest rates, with nearly two thirds of businesses saying staff levels will not be affected by further hikes. Only one in ten think that they would have to make cuts in numbers.
The research also found that 63% of businesses think the rates will make no difference to the value of the pound in relation to their business.
Martin Lyne, director of small business, Orange Business Services said:
“Interest rates obviously have a big impact on business and with the highest rates in nearly six years, it’s clear that UK businesses will need greater support through these tougher trading periods.
“The big fear is that we have yet to see the full effect of the previous increases, but it's very positive news that the majority of businesses feel that staff numbers will not be affected.”
Opinions of business leaders are split on whether a recession is imminent, with a third expecting the UK economy to go into recession in the next two years, a third believing it won’t and a third being unsure.
© Crimson Business Ltd. 2007
