Friday, 16 May 2014

CBI Predicts Interest Rate Rise

The Confederation of British Industry has predicted that the national interest rate will rise early next year, becoming the third major organisation to make such a claim. What could this mean for you if you are looking to sell your business in the next year?

The UK’s Benchmark Interest Rate
Interest rates – the amount of a loan that is charged as interest to the borrower – is crucial to the business industry. That is because interest rates are a huge economic factor, and as such, any change to national interest rate policy has the ability to either positively or negatively impact businesses on a national scale.

The Bank of England set their benchmark interest rate at 0.5% towards the latter end of last year. They did so in order to stabilise the economy and stimulate growth. The fact that financial experts have now predicted that the UK will return to pre-recession levels of growth by summer this year, would suggest it is a policy that has benefitted the nations finances and put you in a strong position if you are looking to sell your business right now.

Therefore, it is not surprising that the Bank of England announced that it will keep its benchmark at 0.5% for the next month, and most likely for the foreseeable future. This means that the environment that has fostered the economic recovery will continue and that can only be a good thing.

The CBI Prediction
However, analysts everywhere agree that the policy cannot, nor should it, stay in place forever. If it stayed in place too long, it could hamper long term growth which would weaken everybody’s bottom line.

Specifically, the CBI has suggested that by early 2015, the Bank of England will have raised the interest rate to 0.75%.  It has also raised its UK growth forecast from 2.7% to 3% for 2014. The National Institute of Economic and Social Research (NIESR) and the Organisation for Economic Co-operation and Development (OECD) have both taken similar steps.

The CBI also commented on business owner confidence: The BBC reported that they said: "We're sensing entrepreneurs across the whole economy - service, manufacturing, exporters - and even the domestic economy feeling more confident [and] making more investment."

At RTA Business Consultants, we see that the CBI has suggested that for the next year, the recovery should remain stable and that it is and will continue to improve business leader confidence. That means that it really might be the best time for you to sell your business.


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