THE Bank of England is expected to raise interest rates for the 14th time in a row, increasing from 5 per cent to 5.25 per cent on Thursday economist predict, as it faces the continued job of controlling stubbornly high price rises.
The last time interest rates stood at 5.25 per cent was 15 years ago in April 2008, highlighting the unusually high rate, and it will mean higher rates on mortgages and loans as well as higher savings rates as households are put under further pressure.
The expected 0.25 per cent rise presents a smaller increase than in July, as rates dramatically rose from 4.5 per cent to 5 per cent, and inflation fell much more than expected in June, offering signs that price rises have begun to ease.
The Bank of England hopes that people will spend less money by making borrowing more expensive which should lead to prices rises easing, however, rising rates too aggressively could cause the economy to slump meaning it is a tight balancing act for the experts.
Earlier this week, Prime Minister Rishi Sunak told LBC radio that inflation was not falling as fast as he would like, but that he believed people could “see light at the end of the tunnel”.
Dr Yi Ding, Assistant Professor of Information Systems at the Gillmore Centre for Financial Technology, commented: “As interest rates continue to rise, innovation must remain a priority as the UK continues to strive for Tech Superpower status, hoping to retain its position as a global FinTech hub. The rising rates will undoubtably cause increased concerns for businesses which means support must be shown towards our innovation drivers, which includes investment and funding, to allow emerging technologies to develop at the speed needed. We must come together collectively, offering a collaborative approach from government, regulators, industry and academia to ensure this is top of the agenda for the UK to remain the go to destination for FinTech development.”
Steven Mooney, CEO of FundMyPitch, commented: “Entrepreneurs and SMEs will be feeling the effects of rising interest rates and as they continue to increase, further support must be provided to allow them to grow and support our economy. Businesses should be receiving a mix of both government and investor support to help them through the turbulent times they have faced in recent times and funding must become a priority. Small and medium businesses play a significant role in innovation, job opportunities and economic stability meaning there has not been a more vital time for support to be shown to help improve business confidence throughout the UK.”
Khalid Talukder, Co-Founder of DKK Partners commented:
“Businesses across the UK will not be welcoming another interest rate rise, however, they should remain confident and have their sights set on the future as the economy works towards stability. SMEs have faced turbulent times over the past few years and as the UK hopes to attract international investment and build overseas relationships to retain its position as a financial and FinTech hub, those who have remained robust should feel confident they can ride the wave of further interest rate hikes. Small and medium businesses are at the lifeblood of the economy, driving innovation and the development of emerging technologies, so it is vital they are provide with support so they can continue to support the UK’s goal of growth.”