Ban for de facto director of African gold trading investment scam
The High Court has banned a de facto director for 14 years for helping defraud investors of £360,000.READ MORE
The UK’s largest business groups say that although getting inflation under control is imperative, the rate rise announced on Thursday (4 August) will have a significant impact on both small and large businesses.
Both the British Chambers of Commerce and the Federation of Small Businesses said while spiralling costs are the greatest concern for businesses, there need to be other solutions put forward to help them survive.
David Bharier, head of research at the British Chambers of Commerce (BCC), said this rise is the clearest signal yet of the Bank of England’s intention to get inflation under control. Spiralling prices are cited by businesses as by far and away the top concern right now.
“However, given the extremely precarious state of the economy, this decision is not without risk for businesses and consumers that are exposed to banking or overdraft facilities,” he said.
“There are many causes of the current inflation crisis – global supply chain problems, trade barriers, soaring energy costs, increased taxes, and labour market shortages. Interest rate rises alone will do little to address these.
“Worryingly, our research indicates strongly that most small businesses are not investing for growth, and that longer-term confidence is beginning to wane.”
The Bank of England’s governor correctly highlighted in his recent Mansion House speech how the incredibly tight labour market is putting upward pressure on inflation.
The BCC has written to the government outlining a three-point plan on how it can work with businesses to solve these recruitment difficulties.
The steps are:
Federation of Small Businesses (FSB) national chair Martin McTague said the need to get a grip on inflation is clear, with costs at a record high for 89 per cent of small businesses according to FSB’s latest Small Business Index – driven by fuel, utilities, inputs, labour and tax hikes.
“Moving interest rates is not without consequences: it’s removing steam from the economy at a time of meagre growth. Small businesses already face grave uncertainty as they try to recover from the impact of Covid, while contending with the cost of doing business crisis,” he said.
“First, many commercial, personal and professional loans that small businesses and sole traders hold are not protected by fixed rates and will move in line with the increase today. In a situation where inflation is already putting many small firms in extremely difficult conditions, there is now further concern that these businesses will face higher costs in paying back their loans.
“Second, attempts to get back to a functioning commercial lending market will be hampered as new products will become more expensive – and so small firms will find it harder to access affordable credit. The British Business Bank’s Recovery Loan Scheme is coming back later this month, and this could not happen soon enough. If the economy slows in autumn, it will be even more important for the scheme to be operational and in place, so it can be flexed up.
“Hard-working individual business owners are also already fighting an uphill battle with supply chain disruption, increasing utility bills and surging fuel prices. Action must therefore be taken on other challenges that small businesses face.
“Many members are reporting mushrooming energy bills multiplying by four or five times in recent months. Small business energy customers don’t benefit from consumer protections, nor do they have the negotiating power of their larger counterparts, making utility bill inflation especially tricky to handle. Struggling micro-businesses should be offered help on energy costs to match that being given to households.”
Mr McTague said the government should also be looking at other measures to ease soaring costs of doing business, such as a reversal of the hike in National Insurance, cutting VAT and fuel duty, and introducing new reliefs on business rates.
“The cost of living crisis can’t be solved without at the same time solving the cost of doing business crisis; we must bring down inflation, but the negative aspects of today’s hike make the case stronger for small business support as thousands upon thousands of small firms will have less financial room to manoeuvre,” he said.