Businesses in Cumbria are being advised to take careful consideration before taking any action in response to interest rates.
The Bank of England has confirmed that it will hold the base rate at 5.25% for the first time since December 2021.
The base rate had previously increased 14 times in a row since December 2021, and has been held following the surprise news that inflation fell slightly to 6.7% from 6.8%.
The bank’s 2% target rate is expected to be achieved by the end of 2025.
Graham Lamont, chief executive of Cumbrian accountancy firm Lamont Pridmore, says that from a business perspective, careful consideration is needed before taking action to address interest rates.
Graham said: “With the base rate at 5.25% businesses may not be receiving attractive savings rates and might be wise to invest any surplus cash on deposit to offset any interest on their borrowing, or they could consider paying or reducing their level of debt.
“However, we recommend taking professional advice before reducing your overdraft or repaying loans.
“Business owners need to consider whether their business performance is good enough to ensure they will be able to borrow funds again if needed for growth or to get through a more challenging trading period.
“Reducing the levels of borrowing may actually make this more difficult in future.”
One in three local savers missing out on higher interest rates
Two of the region’s largest building societies says that more than a third of adults in the North West are still keeping most of their savings in an account earning little or zero interest – despite interest rates now at their highest for 15 years.
This week is UK Savings Week and the Cumberland Building Society and Furness Building Society are urging people to check whether they are getting the best deal on their savings – and to consider starting a regular saving habit to get an even bigger return on the latest interest rate deals.
Sam Coulthard, savings and current account product manager at the Cumberland Building Society, said: “With interest rates very low for years, many UK savers have continued to keep their money in accounts earning little or zero interest, and haven’t seen the point of shopping around for a slightly better deal.
“That’s all changed now, so it’s the perfect time to look at your savings in the round – to see if you could be earning better interest on your savings and how much you might be able to save regularly each month. Together it all adds up to something good!”
The BSA research revealed that 31% of savers in the North West put money aside on an ad-hoc basis whenever they have the money, while 37% save whatever they can afford that month.
Lawrence Chan, head of savings strategy at Furness Building Society, said: “It’s important for everyone to have some savings put aside for a rainy day, even if it’s just a small amount. Having an emergency fund can make all the difference when an unexpected circumstance impacts your finances, such as job loss or emergency home repairs.
“The UK Savings Week Challenge is a great way to start building that pot, and ultimately make savings a habit.”
