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UK SMEs could save thousands in borrowing costs following the Bank of England's decision to cut interest rates to 4.5%, according to business finance experts.
The quarter-point reduction – the third cut in just over six months – comes as welcome relief for businesses facing continued economic pressures.
Stacy Clementson, Head of Credit & Underwriting at business finance provider Fleximize said: "This interest rate cut will be welcomed by small businesses and should open options to borrow at a cheaper cost, making growth plan margins more viable against the cost of borrowing. There may be opportunities to refinance existing borrowing into cheaper finance to free up cash flow and reinvest this back into the business.”
The rate cut arrives against a challenging economic backdrop, with the Bank of England halving its 2025 growth forecast from 1.5% to 0.75%. The Bank also projects unemployment to rise to 4.8% over the next year, while inflation is expected to reach 3.7% in Q3 2024.
Two members of the Bank's Monetary Policy Committee pushed for an even steeper half-point cut, highlighting growing concerns about the UK's economic outlook. This split decision suggests further rate cuts could be on the horizon, potentially creating additional opportunities for businesses to reduce their borrowing costs.
Fleximize, which has provided over £470 million in business funding since its launch in 2014, has seen increasing demand from SMEs looking to take advantage of the changing interest rate environment to restructure their finances and fund expansion plans.
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