18.02.2015

Decrease In Firms Concerned About Inflation Amidst Rise In Interest Rate Worries

The concerns facing SMEs in the North West are shifting compared to last year, a report from Lloyds Bank has found.
 
Smaller firms are less worried about inflation, but concerns over interest rate increases are up on 2014. However, foreign currency fluctuations are less of an issue for SMEs, with the number of companies citing it as a concern remaining the same.
 
The recent fall in inflation to a record rate of 0.3% is reflected in a 6% decrease in the number of SMEs worried about a rise, down to 68% this year from 74% at this time in 2014.
 
A rise in interest rates is now the fastest-growing concern in the run up to the general election, with a 2% increase on last year bringing the number of SMEs citing it as a concern to 67%. Concern over foreign currency movements remained static at around 56%.
 
Trevor Williams, chief economist, Lloyds Bank Commercial Banking said: "The recent drop in oil prices has had a big impact on driving down price inflation.
 
"However the expected boost to consumer spending from falling oil prices means that an interest rate rise is still likely at some point over the next 12 months. Businesses need to be alert to this risk."

Expert Opinion

This research has put a vital spotlight on the concerns facing small and medium-sized enterprises at present, especially with the General Election just around the corner. <br/> <br/>"While improvements have been seen in the economy in recent months, SMEs and businesses of all sizes continue to face a range of pressures both generally and specific to their sectors. <br/> <br/>"It is vital that growing firms do not go it alone when it comes to handling such issues and have a support network in place to help them through all aspects of their business. Legal expertise should be a key part of this." Fergal Dowling - Partner