Following the decision by the Bank of England to hold the base rate at 5.25%, Federation of Small Businesses (FSB) National Chair Martin McTague said:
“While widely predicted, today’s decision by the Monetary Policy Committee to keep the base rate at 5.25% rather than opting for a cut will be seen by many small firms as a missed opportunity. It is however encouraging to see the Committee’s attitude softening further, with two members voting for a cut, up from just one in March.
“Our most recent research into small businesses’ economic prospects supports the argument for a summer cut in the rate. Nearly three times as many small firms rated the availability and affordability of new finance as ‘poor’ than rated it as ‘good’ in the first three months of this year, according to our most recent Small Business Index, while the proportion of successful new finance applications among small firms dropped to the lowest level recorded since this time last year.
“The domestic economy is cited as by far and away the biggest concern with regards to future growth prospects, while the second-most commonly cited barrier to growth is consumer demand. Keeping the rate at its high plateau for longer than absolutely necessary will make it much harder for small businesses to think about growth and investment, which is what will be needed for the economy as a whole to get out of its pattern of near-zero growth.
“We’ll know on Friday whether we are formally out of a recession, but the tentative recovery seen in the first part of this year is still fragile. Small firms’ confidence is returning – in part because they are anticipating rate cuts this year. There is only so long they can wait, which is something we would urge the Bank of England to bear in mind.”
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As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.