SME bosses predict first-half rate increase

Rakesh Shaunak says a rise is expected in April. Picture: Contributed

Rakesh Shaunak says a rise is expected in April. Picture: Contributed

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Bosses of Britain’s smaller and medium sized enterprises (SMEs) are eyeing an interest rate hike in the first half of 2016, according to a new poll.

The US Federal Reserve recently raised base rates, but opinion is divided as to when Bank of England officials on this side of the Atlantic will follow suit.

UK rates have not budged from 0.5 per cent since March 2009. Many analysts anticipate an increase by the summer but others believe a change will not take place before the end of 2016 as inflation continues to hover around zero and the economic recovery remains fragile.

A new survey of SMEs by accountancy firm MHA MacIntyre Hudson reveals that over a quarter of its sample expect rates to first rise in April.

Just 6 per cent of the bosses surveyed said they were anticipating rate rises from January and nearly 7 per cent from February, but around three quarters were expecting an initial rate rise in the first six months of next year.

Despite the expectations of a rate rise, four fifths of SME bosses haven’t attempted to fix their current rates with their lenders or banks, according to the report.

Rakesh Shaunak, chairman of MHA MacIntyre Hudson, said: “The US Fed’s recent decision to increase bank base rates makes an interest rate rise in the UK more likely earlier next year.

“Our poll found that the over a quarter of our clients are expecting a rise next April, but there are also around another quarter who are expecting rises from August or later.”

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