INTEREST RATES RISE FOR FIRST TIME IN A DECADE

mcbrides-accountantsThe Bank of England  raised the Bank Rate to 0.5pc today; this watershed moment heralds the first rate rise in more than a decade.

Commenting on today’s interest rate rise, Nick Paterno, managing partner of McBrides Chartered Accountants, said:

“Whilst widely promoted beforehand, today’s interest rate increase may be seen as watershed moment by many in the London and South East business community after declining and static rates for a period of 10 years now . The move might appear premature to some as it may seem that we’re not quite ‘out of the woods’ economically just yet particularly with the continuing uncertainties surrounding Brexit. Whilst this increase will probably have little impact on most businesses, the question most owners will be asking is how often and how steeply will future increases be implemented in this new environment of presumably upwards only rate increases.

“If the expectation builds that this starts a 0.25% rise each quarter, then we would be looking at a full 1% increase by this time next year. Business owners and homeowners might will begin tightening belts and spending and investing less because of today’s decision. But if the expectation is anything more than this, the brakes could be applied to the economy quite sharply.”

“While this may be marginally good news for savers, it will depend on how quickly and fully banks and building societies pass on the increase to their customers. The majority of mortgages are on a fixed rate basis so hopefully the impact on consumer spending will be slight.”

 

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