Today, Thursday 3 November 2022, The Bank of England increased interest rates by 0.75% to 3% – The highest interest rates have been since the financial crisis in 2008.
The UK is already experiencing early signs of recession, which is expected to continue throughout 2023 before beginning to ease in early 2024.
Chancellor Jeremy Hunt responded to the increase saying, “Inflation is the enemy and is weighing heavily on families, pensioners and businesses across the country. That is why this government’s number one priority is to grip inflation, and today the Bank has taken action in line with their objective to return inflation to target.”
The Bank of England believes by increasing interest rates it will make borrowing more expensive and encourage people not to spend money, easing the pressure on prices in the process which will in turn begin to reduce inflation.
What this means
Increases in interest rates make borrowing for individuals and businesses more expensive.
As previously reported, businesses with commercial lending will also likely see an increase in loan repayments which is an additional cost for businesses who are already tackling the increased costs due to inflation across the board.
Individuals and businesses are being continually advised to begin saving where possible, which will in turn help to reduce inflation, due to saving more and spending less.
Unemployment is currently at its lowest for 50 years, but is expected to rise to 6.5% due to businesses struggling with the constant unprecedented increase in expenditure.
How can you cut costs in your business?
Read our earlier blog on Business Savings During the Cost of Living Crisis, http://www.seavorchartered.co.uk/cost-of-living-crisis/#more-6162
How we can help you
If you’d like to discuss your finances and our services we can provide to support you through the cost of living crisis, call us on 01228 904904 or pop us a message at mail@seavorchartered.co.uk.
