Responding to the Bank of England’s Monetary Policy Committee’s vote to keep the base rate at 5.25%, Federation of Small Businesses (FSB) Chair Martin McTague said:
“A third hold in a row was widely expected, but yesterday’s worse than expected GDP result has to be setting alarm bells ringing among economists and policymakers.
“The MPC needs to be responsive to indications that economic damage is setting in, and should consider moving the timetable for rate cuts up.
“Small firms are often interest rate bellwethers, as a result of their own index-linked borrowing, and also as the businesses that are most affected by downturns in consumer spending prompted by higher rates.
“With the lending environment for small firms having become far less hospitable, they are increasingly less able to get the funding they need to invest for the future – or even to keep going.
“Adding to the difficulties many would-be borrowers face is the issue of personal guarantees being demanded by banks for relatively small sums. That is why we have sent a super-complaint to the Financial Conduct Authority to ask it to investigate, and to consider expanding its regulatory perimeter to cover more small business loans.”