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Will the Bank of England’s Recent Suggestions Aid Businesses?

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The British economy is experiencing a somewhat exciting time at the moment, mainly due to the impact Brexit has had on the country’s finances. However, exciting doesn’t always mean good and the uncertainty it has provided has led to a lot of worries for individuals and businesses alike. The Bank of England has realised that sitting and doing nothing poses an incredible risk, so it has come up with a few suggestions that could help businesses.

Interest Rate Movements

The Bank of England has taken the dramatic decision to cut interest rates to a record low of 0.25%, in the first cut it has made since 2009. It has also signalled that if the economy gets even worse the rate could drop even lower, as their chief economist claimed that it was better to use a sledgehammer to crack a nut rather than a tiny hammer.

This movement in the national interest rate has been put into action as a way to encourage and help businesses. It is hoped to stimulate consumer spending, putting some of that money back into businesses, and make it more affordable for companies to go about their daily business.   

Unemployment

Employment levels have changed little since the Brexit announcement, but with the UK’s uncertain economic future there are a lot of worries that unemployment could soon rise. The Bank of England’s interest rate slashing and other monetary policy changes have been brought in as a measure to try and prevent this.

If people start spending more money than businesses should see some growth, making redundancies less of an issue, for example. However, the Bank of England doesn’t directly control employment levels, so in many ways its actions are done in an attempt to have a positive impact on this.

The Global Impact

It’s not just UK businesses that the Bank of England’s actions will affect. Asian markets have been trading higher since the announcement of interest rate cuts and forex traders have benefitted from the pound’s continuing fall in value.

As for UK businesses, if these actions don’t help them out then they may have to look at other options, such as spot factoring with Touch Financial. Hopefully the UK economy will pick up in the near future and the Bank of England’s measures have a positive effect, but if not then businesses will need to take a new approach to succeed. 

Author Neil Buckland

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