A FURTHER increase in UK interest rates “will inflict more pain on already hard-pressed businesses in Northern Ireland,” an industry leader has claimed.
And Alan Lowry, who is policy chair of the Federation of Small Businesses (FSB) in the north, is urging the Bank of England to “show moderation” when it sits on Thursday to deliberate on the changes.
A further rise in the rate looks inescapable, according to experts, as inflation remains stubbornly high.
The Bank is expected to raise the base rate by 0.25 percentage points, taking it to 4.75 per cent.
But some commentators suggest there could be a more aggressive increase of 0.5 percentage points, heaping further misery on already hard-pressed businesses and home-owners.
Mr Lowry's comments come in the wake of publication of the latest UK inflation figures, with the headline rate in May remaining static at 8.7 per cent and core inflation rising by 7.1 per cent.
He said: “What the Bank of England does next after these inflation figures will be a cause for concern for small businesses across the country.
“Higher interest rates increase the cost of doing business. The cost of borrowing has rocketed and will stunt the potential for expansion and growth.
“Now is a time for moderation from the Bank of England, otherwise a jump in already high interest rates will inflict more pain on already struggling businesses in Northern Ireland.”
Mr Lowry added: “Businesses in the retail, hospitality and leisure sectors here don`t benefit from the 75 per cent discount on rates which their counterparts in England and Wales can avail of, so they face a double whammy of pain – increased interest rates alongside lower rates of government support.
“Policy-makers need to give small firms an olive branch to navigate these difficult times by taking steps to keep finance flowing. I hope they take that advice, but regrettably I`m not optimistic that will happen.
“It is also vital the Stormont Executive is restored, because without it, measures such as the 75 per cent discount on business rates for the retail, hospitality and leisure sectors, will remain a pipe dream.
“We urgently need local politicians and policy-makers back in government making local decisions to help Northern Ireland`s business community. The right policies and government support in place would help small businesses navigate a plethora of challenges.”
