Business owners not planning for interest rate rises, study shows

The majority of UK business owners and managers are not planning today to cope with future interest rate rises despite 77 per cent of those in a national survey expecting an increase before the end of 2016.
 
The most recent results of the Close Brothers Business Barometer, a quarterly survey that canvasses the views of small to medium sized business owners and senior management across the country, show that just 16 per cent of those asked have considered taking precautionary measures.
 
Brian Dhenin, Managing Director of the Broker Division at Close Brothers Asset Finance, says the results may indicate a degree of uncertainty about how UK interest rates could behave in the next 12 months against the backdrop of a general election, zero inflation and an under-performing Eurozone.
 
“Our survey shows that 15 per cent believe rates will rise in Q3 of this year with a further 13 per cent expecting it to come in before the end of 2015,” said Mr Dhenin. “It sounds as if many business managers and owners find it too hard to call, yet it is generally understood that interest rates can’t stay this low forever.
 
“We would encourage businesses to put a contingency plan in place to cope with a rate rise as it could have a dramatic impact on their operations, making borrowing more expensive and impact cash flows as more is needed to service debt.
 
“All major industrial sectors covered in our survey pinpoint 2016 as the year when rates will increase yet precious few are thinking today about the consequences and we would urge them to do so,” added Brian Dhenin. “The time to act is now.”