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FSB Chairman urges Bank of England caution


The Bank of England has decided to keep interest rates at 0.25%, despite some pressure on the UK economy.

Responding to the Monetary Policy Committee (MPC)’s split decision (6-2) to maintain a 0.25% Bank Rate and its 3% CPI forecast for October, Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “At a time of unprecedented uncertainty it’s more critical than ever that the MPC approaches interest rate decisions with caution.

"Against a backdrop of slowing economic growth, increased debt costs would put yet another strain on our embattled small business community.

“Any firm that’s set up in the last ten years has only known business life in a low interest rate environment. They must be ready for that to gradually change at some point. It’s critical that the Government steps up its efforts to inform small business owners about what higher rates will mean for borrowing costs, consumer demand and the property market. 

“Operating costs for small firms are now at their highest in four years. With inflation set to pick up again towards the end of the year, our entrepreneurs need support. Many are paying themselves less and further increasing prices in an attempt to handle the squeeze. The last thing they need is hikes to stealth taxes, particularly fuel duty and insurance premium tax, as part of attempts to paper over gaps in the public finances.”

Picture courtesy of Martin Pettitt