Home > Business Finance News > One more rate rise 'acceptable to SMEs'

One more rate rise 'acceptable to SMEs'

Published On 19 April 2007 at 12:26:55

British businesses have accepted that one further rise in interest rates is necessary after inflation reached 3.1 per cent earlier this week.

However, David Kern, an economic advisor for the British Chamber of Commerce, said that calls for an increase in base rates of more than 0.25 per cent were "misguided and potentially dangerous".

Mr Kern explained: "Higher interest rates are already causing considerable pain.

"The squeeze on consumer disposable incomes is intensifying, and the surge in sterling is squeezing exporters' margins, in spite of the partial offsetting benefits resulting in reduced costs of imported raw materials.

"The Monetary Policy Committee (MPC) must curb the upsurge in inflation, but must avoid monetary overkill that may cause long-term damage to business."

Mr Kern said that the minutes of the most recent MPC meeting indicated that an interest rate rise was likely even before the inflation figures were published.

After inflation exceeded three per cent, the governor of the Bank of England had to write a letter to Gordon Brown explaining the reasons for the increase.

Mervyn King said that increases in energy prices were partially responsible for increased inflation.

 

Related Business Finance News:

• FPB urges SMEs to prepare for higher interest rates
  8 June 2007 at 12:21:42
  A group which represents the interests of small and medium-sized enterprises (SMEs) in the UK has advised its members to take advantage of the Monetary Policy Committee's decision not to increase interest rates, and look for good fixed-rate loans.
• Businesses welcome rate decision
  7 June 2007 at 12:46:24
  Business leaders have welcomed the Bank of England's decision not to increase interest rates again.
• SME tax case goes to the Lords
  6 June 2007 at 12:44:49
  The Federation of Small Businesses (FSB) has backed a small business as its case against HM Revenue & Customs (HMRC) is heard in the House of Lords.
• Rain dampens retail sales figures in May
  5 June 2007 at 12:14:59
  Bad weather during May was partly responsible for the poor retail sales figures which small and medium-sized enterprises (SMEs) in the UK recorded in the month, a new report argues.
• Further rate rises 'will hurt SMEs'
  4 June 2007 at 17:01:38
  Ahead of next week's meeting of the Monetary Policy Committee (MPC), a group representing the interests of small and medium-sized enterprises (SMEs) has urged the Bank not to increase interest rates again.
• Bank offers free services to SMEs
  4 June 2007 at 09:01:54
  A leading high street bank has unveiled a new offer to try to encourage small and medium-sized enterprises (SMEs) to switch their banking services.
• Bank offers advice to start-ups
  31 May 2007 at 12:23:30
  A leading high street bank has launched a new service designed to help entrepreneurs start their own small and medium-sized enterprises (SMEs).