Bank Morgan Stanley has announced that the UK base interest rate will be as low as 3.25% by the end of the year, and drop to 2.75% during the first half of 2026.
Aman Parmar, Head of Marketing at flexible workspace provider Bizspace has commented on what this anticipated drop in rates could mean for small businesses and SMEs:
“The potential effect of this drop will mean that businesses can begin to benefit from lower borrowing, and will have greater access to loans and credit at a reduced cost to help get growth ambitions back on track. The opportunity to stimulate investment, in the form of making upgrades to existing technology, modernising workspaces or facilities, or expanding production capacity, can be used to SMEs advantage.
“Looking at it from a wider viewpoint, the decline in interest rates could also lead to a boost to consumer spending due to a boost in disposable income from lower mortgage rates, car loans or credit card payments.
“Many savvy consumers who find themselves with extra income to spend will actively seek out independent retailers or family-owned businesses, and since the devastation of the COVID pandemic, tend to see surviving small, local and independent companies as the lifeblood of economic growth within their regional communities.
“That being said, SMEs will continue to err on the side of caution, particularly since the start of the new tax year last month, when significant budgetary changes – including rising national insurance contributions and higher minimum wages for employees – came into effect. The reduction to business rate relief from 75% to 40% has also been a significant concern for those running small businesses within the hospitality, retail and leisure sectors.”
