Back in March 2009 the Bank of England lowered Base Rate from 1% to 0.5%. I very much doubt too many economic commentators could honestly say they felt, at the time, Base Rate would still be 0.5% over six and a half years later.
Predictions that the rate would rise in early 2015, or shortly post election, have been proved wrong and no two economists would agree on when any rise is likely to happen. What is the general view though is that at some point rates will rise, in what increments and when is guesswork.
A contributory factor to financial success is a short memory and a lot of businesses will have been formed in the last six years with no ability to refer to a point in time when interest rates were materially higher than today. Consequently as and when rates do rise many businesses will need to undertake exercises to calculate their ability to service more expensive debt.
One by product of such a low Base Rate has been the increase in the number of non-bank lenders, driven by individuals and groups seeking a better return for their invested money. Consequently its possible an increase in rates could have a double effect, the number of lenders may go down, limiting choice and borrowing rates will go up.
One bit of good news this week from Tesco’s with a new promise to pay their smaller suppliers (those supplying less than £100,000 per annum) within 14 days.
……………………..and of course the weekly blog wouldnt be complete without a look at the puppies, only a couple of weeks to go before they head off to begin their careers within Guide Dogs