- 03 Aug
Base Rate Increases To 0.75 Percent
Yesterday, 2nd August 2018, the Bank of England (BOE) announced its decision to increase bank rate to 0.75%, according to BBC reports. A rise of 0.25%, and only the second rise in the last decade. This marks the highest base interest rate since March 2009. There will be a whole generation in the UK that have never known interest rates to be the heady 5 to 15% levels that some of us remember during the UK's attempts to stay in the Exchange Rate Mechanism, back in the early 90's.
Further Interest Rate Rises To Come
Mark Carney, Governor of the BOE, warned of further "gradual" and "limited" rate rises to come. The BOE has partly put the low economic growth rates during Q1 2018 down to the impact of the Beast from the East, causing problematic weather condition. Following 0.2% growth in GDP in Q1, 0.4% growth is forecast for Q2 with 1.4% growth predicted this year. Furthermore, a rise to 1.8% growth next year is forecast.
Growth Is Good News For The Invoice Finance Sector
Growth is great for the economy and our sector, the invoice finance companies are closely allied with funding business growth. The faster companies grow, the more they can feel the cash flow limitations of waiting for customer to pay before you can use the money tied up in your sales ledger. Invoice finance releases that cash for immediate use to pay suppliers, purchase stock and materials or meet your wage bills.
We have identified a close correlation between high growth businesses and the use of invoice finance, with rapidly expanding companies having a very high propensity to use there cash flow services (52% of those growing at 20%+ per annum were found to use invoice funding).
The key for the UK economy is not to stifle the growth with interest rate rises, particularly in the shadow of Brexit. Lets hope the level of growth continues to rise.