BFS comments on trade war and its impact on UK interest rate

As the effects of Trump’s trade war ripple throughout the global economy, financial experts have predicted a more than 100 per cent chance of an interest rate cut from the Bank of England (BoE) next Thursday 8th May.

Ahead of the Bank’s decision, Theo Chatha (pictured), Chief Financial Officer of Bibby Financial Services (BFS) commented:

“All signs point to a May rate cut from the BoE – a potential green light for SME investment, as over six in 10 (62 per cent) SMEs say they will feel more confident investing if rates fall. But in today’s uncertain climate, a cut no longer holds the promise it once did.

On paper, lower rates should be a boost for SMEs and the economy, easing borrowing costs and encouraging business investment. But relief from a cut could be short-lived, as the BoE may need to raise rates again later in the year to curb inflationary pressure due to tariffs friction.

This threatens to dampen SMEs’ ambition – meaning investment plans are delayed further, but SMEs can’t afford a ‘wait and see’ approach to decision making. Against economic uncertainty, businesses that continue to invest and plan for every scenario will stay ahead of the competition.”