SMEs not concerned by potential higher interest rates

The majority of small to medium sized businesses (SMEs) are unfazed by the prospect of raised interest rates.

A survey by the Institute of Chartered Accountants in England and Wales (ICAEW) found that 78 per cent of SMEs felt that any interest rate rises in 2015 would not adversely affect their business.

Firms are shielded by sufficient cash cushions so would not feel the effect of rate rises from borrowing, with 86 per cent of those not worried by higher rates said to be cash positive.

Stephen Ibbotson, Director of Business at ICAEW said: “SMEs are the backbone of the economy, and it is interesting to see that the vast majority are not concerned by an interest rate rise coming in 2015.

“Indeed, with so many not investing, or hiring, it looks like we are in a 'wait-and-see’ period for many businesses. Given that the economy is likely to slow down next year, SMEs seem to be sitting on cash to weather any storms that could arise.”

Of the number of SMEs that were concerned about looming rate rises, 71 per cent of respondents felt that their business would be suffer most from a drag on consumer spending.

The research comes ahead of the Bank of England’s Inflation Report, due to be released on 12 November. The report will lay down projected growth, unemployment and inflation, reported the Telegraph.

According to the Federation of Small Businesses SMEs make up 99 per cent of all private sector companies within the UK.

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